Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 847: Green Public Procurement as an Environmental Policy Instrument:Cost Effectiveness

Sofia Lundberg () and Per-Olov Marklund ()
Additional contact information
Sofia Lundberg: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Per-Olov Marklund: Center for Regional Science at Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: Estimates by the European Commission indicate that public authorities within the European Union typically purchase goods and services corresponding to approximately 16 percent of GDP per annum. Hence, it is believed, private firms can be stimulated to invest in less polluting production technologies if the market power of public bodies is exerted through Green Public Procurement (GPP) policies and legislation. It is commonly argued that there are considerable possibilities for cost-effective GPP. The aim of this paper is to scrutinize this argument by specifically answer the question whether GPP can work as a cost-effective environmental policy instrument in terms of leading firms to reducing emissions at least cost to society. Our main finding shows that this is not the case.

Keywords: Auctions; Abatement; Compliance cost; Environmental objectives; Green technology; Investments

JEL-codes: H57; Q01; Q28

26 pages, September 13, 2012

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