Assessment of Green Public Procurement as a Policy Tool: Cost-Efficiency and Competition Considerations

Abstract

Public procurement is officially regarded as an effective means to secure environmental improvement. Estimates by the European Commission indicate that public authorities within the European Union typically purchase goods and services corresponding to approximately 16 percent of GNP per annum. Hence, it is believed, private firms can be stimulated to invest in sustainable production technologies if the market power of public bodies is exerted through Green Public Procurement (GPP) policies. In this paper we assess whether GPP is a cost-efficient policy tool, and if so whether its implementation can, from a welfare perspective, deter or stimulate entry to procurement markets.

Keywords: Competitive Bidding, Cost-efficiency, GPP, Procurement auctions, Sustainability

JEL Classification: H57, Q01, Q28