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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. 

Empirical evaluations of policies implemented through public procurements are commonly carried out using linear regressions or by more involved non-linear structural models. The aspiration is typically to determine a marginal effect. Here, I compare marginal effects generated under both types of specifications. I study how a political initiative to make firms less environmentally damaging implemented through public procurements influences Swedish firms’ behavior. The collected evidence brings about statistically as well as economically significant effects on firms’ bids and costs.

Auction theory suggests that as the number of bidders (competition) increases, the sizes of the participants’ bids decrease. An issue in the empirical literature on auctions is which measurement(s) of competition to use. Utilizing a dataset on public procurements containing measurements on both the actual and potential number of bidders I find that a workhorse model of public procurements is best fitted to data using only actual bidders as measurement for competition. Acknowledging that all measurements of competition may be erroneous, I propose an instrumental variable estimator that (given my data) brings about a competition effect bounded by those generated from models using the actual and potential number of bidders, respectively. Also, some asymptotic results are provided for non-linear least squares estimators obtained from a dependent variable transformation model.

A novel methodology to measure bidders’ costs (valuations) in descending (ascending) auctions is introduced. Based on two bounded rationality constraints bidders’ costs (valuations) are given an imperfect measurements interpretation that is robust to behavioral deviations from the traditional rationality assumptions. Theory provides no guidance as to the shape of the cost (valuation) distributions while empirical evidence suggests them to be positively skew. Consequently, a flexible distribution is employed in an imperfect measurements framework. An illustration of the proposed methodology on Swedish public procurement data is provided along with a comparison to a traditional Bayesian Nash Equilibrium methodology.