Market Response to Environmental Policy Via Public Procurement : An Empirical Analysis of Bids and Prices

This paper studies the practice of environmental requirements in the allocation of public contracts (Green Public Procurement, GPP) under two different regulation periods. More specifically, the effect of GPP and revised regulation (including increased GPP ambitions) on competition, bids, and winning bids is empirically analyzed. Based on detaileddata from Swedish internal cleaning service procurements, our results imply that environmental considerations might not influence the bids as required for GPP to be considered an effective environmental policy instrument. Over time, lower degree of competition and increased bids are found, which is - at least partially - explained by a regulatory effect – indicating increased complexity of submitting bids