Industrial policy can affect the investment and product production of enterprises from the supply side, and can also affect the demand and purchase behavior of the consumers from demand side, both of which can boost or inhibit the formation and development of the industries and have the effect on the market. The influence of industrial policy at the supply side and at the demand side on industrial development has heterogeneity because the action path and method are different from one aspect, and has synergy because both of them are in the same direction (inhibition or promotion) from another aspect, and the heterogeneity and synergy have difference for different industries. Based on policy sensitivity of environmental protection industry, by taking tax preference and financial support as policy factor at supply side, by taking environmental regulation as policy factor at demand side, the related data of China’s environmental protection industry during 2007-2017 is used for systematic dynamics simulation, and the results show that tax preference and financial support, which directly affect the investment and production behavior of the enterprises, can quickly promote the output of environmental protection industry and promote market agglomeration but the descending trend of policy effect is obvious (policy durable effect). Environmental regulation boosts industrial development by increasing demand, can produce significantly boosting effect on output growth after a period of time, but regulation intensity enlargement can not weaken the policy effect. The implementation of tax preference, financial support and environmental regulation at the same time has better policy effect than that of single policy, has bigger boosting effect on output growth and can mitigate the durable effect of industrial policy at supply side and mitigate the bigger volatility of market agglomeration produced by tax preference. Thus, in the process of the structure reform at supply side, the usage and optimization of the policy at demand side should not be ignored. The heterogeneity and synergy of industrial policy at supply side and at the demand side should be sufficiently used to overall control the industrial development, and optimal policy combination should be searched and realized by taking care of the moderation and matching of each policy.