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The greener, the better? Evidence from government contractors

Author

Listed:
  • Olga Chiappinelli

    (University of Barcelona, BEAT)

  • Ambrogio Dalò

    (Universiy of Groningen)

  • Leonardo M. Giuffrida

    (ZEW Mannheim, MaCCI, CESifo)

Abstract

Governments can support the green transition through green public procurement. Despite its strategic importance, the impact of this policy on firms remains unclear. Using US data, this paper provides the first empirical analysis of the causal effects of green contracts on corporate environmental and economic performance. We focus on an affirmative program for sustainable products, which represents one-sixth of the total federal procurement budget, and publicly traded firms, which account for one-third of total US emissions. Our results show that securing green contracts reduces emissions relative to firm size and increases productivity, with these effects persisting in the long run. We find no evidence that the program selects greener firms, nor that green public procurement sales crowd out private sales. We propose that increased R&D investment, incentivized by the program’s requirements, is a key mechanism behind these improvements.

Suggested Citation

  • Olga Chiappinelli & Ambrogio Dalò & Leonardo M. Giuffrida, 2024. "The greener, the better? Evidence from government contractors," UB School of Economics Working Papers 2024/474, University of Barcelona School of Economics.
    • Handle: RePEc:ewp:wpaper:474web
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    File URL: https://hdl.handle.net/2445/215447
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    More about this item

    Keywords

    Public Procurement; Environmental Policy; Firm Performance; Staggered Difference-in-difference;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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