Optimal discounts in Green Public Procurement

Arbeitspapier

We consider a Green Public Procurement setting where the procurer provides a bid discount to environment-friendly technologies to foster their use. We assume that, before the auction, firms may switch to green technology via a publicly observable costly investment. We show that investment acts as a signaling device. This mitigates the effect of incomplete information on firms' costs, thereby triggering more competitive bidding, which results in lower prices for the procurer. Therefore, even a procurer with no preference toward green technology can find it optimal to use a discount. Our results challenge the common perception that Green Public Procurement always implies a trade-off between environmental performance and purchasing price.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1983

Classification and Topics

• Classification: Wirtschaft ; Auctions ; National Government Expenditures and Related Policies: Procurement ; Environmental Economics: Government Policy ; Environmental Economics: Technological Innovation
• Subject: Public Procurement ; Environmental Policy ; Auctions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chiappinelli, Olga ; Seres, Gyula
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/248486
• Last update: 10.03.2025, 11:44 AM CET