Adrien Deschamps

Abstract

Many governments around the world use public procurement as an environmental policy instrument through the inclusion of green clauses and award criteria. Green clauses consist of mandatory standards governing contract performance, while green award criteria incorporate sustainability into bid scoring. At first glance, green clauses and criteria can reduce firm participation in procurement procedures by requiring specific technologies and increasing participation costs. This concern echoes a broader issue regarding the declining attractiveness of public procurement leading to weak competition. The purpose of this article is to evaluate the impact of green clauses and green award criteria on firm participation in public procurement from both theoretical and empirical perspectives. From a theoretical standpoint, we show that green clauses and criteria have a ambiguous effect on participation as they can exclude some firms and raise participation costs while increasing the expected margin. We test this theoretical prediction using 50,000 award procedures in France. The empirical results reveal a global positive effect of both green clauses and green criteria on participation, despite substantial sectoral heterogeneity. The growing integration of sustainability considerations into public procurement is therefore unlikely to be responsible for the observed decline in competition for public contracts.