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Policy by Public Procurement: Opportunities and Pitfalls
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.ORCID iD: 0000-0002-4477-4177
2015 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

In Paper [I], we theoretically assess green public procurement (GPP) as an environmental policy instrument and its ability to lead to the achievement of environmental objectives. Central to our analysis is the extent to which polluting firms choose to adapt to the public sector's environmental requirements and to invest in greener technologies. Our main finding is that the potential of GPP to function as an objective-effective instrument of environmental policy is limited and can actually be counterproductive. From an environmental policy point of view, it is crucial that GPP aims for environmental standards beyond just the technology of the polluting firms and that it is designed with reference to defined environmental objectives.

In Paper [II], we use data on Swedish public procurement auctions for internal regular cleaning service contracts to provide novel empirical evidence regarding GPP and its effect on the potential suppliers' decision to submit a bid and their probability of being qualified for supplier selection. We find only a weak effect on supplier behavior, and this suggests that GPP, as used in practice, does not live up to its political expectations. However, several environmental criteria appear to be associated with increased complexity, as indicated by the reduced probability of a bid being qualified in the post-qualification process. As such, GPP appears to have limited or no potential to function as an environmental policy instrument.

In Paper [III], I examine how GPP is organized in Sweden and how the potential suppliers respond to varying buyer market shares using data on Swedish public procurement auctions for internal regular cleaning service contracts. The level of GPP stringency is found to vary systematically across authority types, buyer market share, and political coalition in the relevant council or in Parliament. The results also indicate quite a substantial dispersion in GPP stringency, suggesting a low degree of coordination among contracting authorities when implementing the policy. After controlling for GPP stringency and other covariates, increased buyer market share is associated with a significant increase in the probability of potential suppliers submitting a bid.

The European Commission encourages public authorities to split procurement contracts into multiple contracts in order to increase the competiveness of small and medium sized enterprises (SMEs). In Paper [IV], I use data from Swedish public procurement auctions for internal regular cleaning service contracts to study the effect of contract size and number of contracts on SME participation and probability of winning. The results indicate that SME participation is negatively related to both contract size and the number of contracts in the procurement. A possible interpretation is that reduced contract size in order to stimulate SME participation is counteracted by reduced incentives for them to enter into procurements with multiple contracts. Medium-sized firms are also more successful when bidding for smaller contracts relative to large firms. Nevertheless, the results indicate that the award rate for SMEs is positively correlated with the number of contracts in the procurement.

Place, publisher, year, edition, pages
Umeå: Umeå Universitet , 2015. , 25 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 915
Keyword [en]
Public Procurement Auction, Environmental Policy, Regulation, Sustainability, Competition, Compliance Cost, Endogenous Entry, Supplier Incentives, Buyer Market Share, Split Award, Small and Medium Sized Enterprises
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-107988ISBN: 978-91-7601-281-9 (print)OAI: oai:DiVA.org:umu-107988DiVA: diva2:850126
Public defence
2015-09-25, Hörsal C, Samhällsvetarhuset, Umeå universitet, Umeå, 13:00 (English)
Opponent
Supervisors
Projects
Green Public Procurement: An Efficient Environmental Policy Tool?
Funder
Swedish Research Council
Available from: 2015-09-04 Created: 2015-08-31 Last updated: 2015-09-04Bibliographically approved
List of papers
1. Is Environmental Policy by Public Procurement Effective?
Open this publication in new window or tab >>Is Environmental Policy by Public Procurement Effective?
2016 (English)In: Public Finance Review, ISSN 1091-1421, E-ISSN 1552-7530, Vol. 44, no 4, 478-499 p.Article in journal (Refereed) Published
Abstract [en]

Advocates of green public procurement (GPP) argue that the public sector can use its purchasing power to influence producers and consumers to reduce their negative impact on the environment. Our aim is to assess GPP as an environmental policy instrument and its ability to lead to the achievement of environmental objectives. Central to our analysis is the extent to which polluting firms choose to adapt to the public sector’s environmental requirements and to invest in greener technologies. Our theoretical finding is that the potential of GPP to function as an objective effective instrument of environmental policy is limited and can actually be counterproductive. From an environmental policy point of view, it is crucial that the GPP aims for an environmental standard beyond the technology of the polluting firms and is designed with reference to defined environmental objectives.

Place, publisher, year, edition, pages
Sage Publications, 2016
Keyword
auctions, compliance cost, environmental policy, endogenous entry, sustainability
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-104115 (URN)10.1177/1091142115588977 (DOI)
Projects
Green Public Procurement: An Efficient Environmental Policy Tool?
Funder
Swedish Research Council
Note

Published online before print June 5, 2015

Available from: 2015-06-06 Created: 2015-06-06 Last updated: 2017-12-04Bibliographically approved
2. Using Public Procurement to Implement Environmental Policy: An Empirical Analysis
Open this publication in new window or tab >>Using Public Procurement to Implement Environmental Policy: An Empirical Analysis
2015 (English)In: Environmental Economics and Policy Studies, ISSN 1432-847X, E-ISSN 1867-383X, Vol. 17, no 4, 487-520 p.Article in journal (Refereed) Published
Abstract [en]

Politicians expect Green public procurement (GPP) to serve as an environmental policy instrument. However, in order for GPP to work as an effective policy instrument it is important to take into consideration potential suppliers’ decisions to participate in the procurement process, the total number of bidders, and the screening of bidders with respect to mandatory green criteria. The aim of this paper is to empirically study GPP in this respect. The analysis presented here is based on data from Swedish cleaning services procurements that are unique in that they contain very detailed information on various environmental standards set by the contracting authorities. We find at best only a weak effect on supplier behavior, and this suggests that the use of GPP in this situation does not live up to its political expectations. 

Keyword
Public Procurement, Auctions, Environmental Policy, Green Public Procurement, Sustainability, Purchasing
National Category
Economics and Business Economics
Research subject
biology, Environmental Science
Identifiers
urn:nbn:se:umu:diva-98079 (URN)10.1007/s10018-015-0102-9 (DOI)2-s2.0-84942817185 (Scopus ID)
Projects
Green Public Procurement
Funder
Swedish Research Council
Available from: 2015-01-15 Created: 2015-01-15 Last updated: 2017-12-05Bibliographically approved
3. The Role of Buyer Power in Public Procurement Auctions: An Empirical Analysis
Open this publication in new window or tab >>The Role of Buyer Power in Public Procurement Auctions: An Empirical Analysis
(English)Manuscript (preprint) (Other academic)
Abstract [en]

Throughout the world, green public procurement (GPP) has become an established environmental policy instrument. Advocates of this purchasing policy argue that the public sector can use its buyer power to incentivize industries into becoming less environmentally damaging. I study how GPP is organized in Sweden and the potential supplier’s response to varying buyer market shares. The level of GPP stringency is found to vary systematically with authority type, buyer market share, and political coalition in the relevant council or the Swedish Parliament. The results indicate quite substantial dispersion in GPP stringency and suggest a low degree of coordination when implementing the policy. After controlling for GPP stringency and other covariates, buyer market share is positively associated with the probability of potential suppliers submitting a bid. 

Keyword
Environmental policy, Regulation, Compliance cost, Endogenous entry, Buyer market share, Supplier incentives
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-107910 (URN)
Note

Manuskriptet tidigare publicerat i serien: Umeå Economic Studies; Nr 913, Tuesday, August 25, 2015.

Available from: 2015-08-30 Created: 2015-08-30 Last updated: 2015-09-01Bibliographically approved
4. Contract Size and Small Firm Competition in Public Procurement
Open this publication in new window or tab >>Contract Size and Small Firm Competition in Public Procurement
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The European Commission encourages public authorities to split procurement contracts into multiple contracts in order to increase the competiveness of small and medium sized enterprises (SMEs). In this paper, I use data from Swedish public procurement auctions for internal regular cleaning service contracts to study the effect of contract size and number of contracts on SME participation and the probability of submitting the winning bid. I found that SME participation is negatively related to both contract size and the number of contracts in the procurement. A possible interpretation is that reduced contract size in order to stimulate SME participation is counteracted by reduced incentives for them to enter into procurements with multiple contracts. Medium-sized firms are also more successful when bidding for smaller contracts relative to large firms. Nevertheless, the results indicate that the SMEs’ award rate is positively correlated with the number of contracts in the procurement.

Keyword
Procurement design, Split-award, Endogenous entry, Small and medium sized enterprises
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-107915 (URN)
Note

Manuskriptet tidigare publicerat i serien: Umeå Economic Studies; Nr 914, Tuesday, August 25, 2015.

Available from: 2015-08-30 Created: 2015-08-30 Last updated: 2015-09-01Bibliographically approved

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