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Buying Green: Government Procurement as an Instrument of Environmental Policy

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  • Donald B. Marron

    (University of Chicago)

Abstract

Governments often favor environmentally superior products in procurement, even if Abstract they cost more than alternatives. This article analyzes the effects of such green procurement policies. If marginal production costs are increasing, private market responses counteract changes in government purchasing (crowding out), thus reduc ing policy effectiveness. If significant scale economies exist, however, then private responses may reinforce changes in procurement. Procurement policies change both the market shares of brown and green products and total production. Whereas the changes in market share usually reduce environmental costs, the changes in total production can go either way. As a result, there are circumstances in which green procurement policies increase environmental costs.

Suggested Citation

  • Donald B. Marron, 1997. "Buying Green: Government Procurement as an Instrument of Environmental Policy," Public Finance Review, , vol. 25(3), pages 285-305, May.
    • Handle: RePEc:sae:pubfin:v:25:y:1997:i:3:p:285-305
    DOI: 10.1177/109114219702500302
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    References listed on IDEAS

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    1. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-1328, December.
    2. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
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    Cited by:

    1. Simcoe, Timothy & Toffel, Michael W., 2014. "Government green procurement spillovers: Evidence from municipal building policies in California," Journal of Environmental Economics and Management, Elsevier, vol. 68(3), pages 411-434.
    2. Sofia Lundberg & Per-Olov Marklund, 2018. "Green public procurement and multiple environmental objectives," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 37-53, March.
    3. Strömbäck, Elon, 2015. "Policy by Public Procurement: Opportunities and Pitfalls," Umeå Economic Studies 915, Umeå University, Department of Economics.
    4. Sofia Lundberg & Per-Olov Marklund & Elon Strömbäck & David Sundström, 2015. "Using public procurement to implement environmental policy: an empirical analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(4), pages 487-520, October.

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