Can green public procurement change energy efficiency? Evidence from a quasi-natural experiment in China

Abstract

Green public procurement (GPP) is an important way to achieve environmentally friendly products, but there is no evidence on whether it can improve the efficiency of corresponding firms. Accordingly, this study constructs a difference-in-differences model using the first Chinese green procurement list enacted as a quasi-natural experiment. We constructed a large sample of firm-level data by cleaning and matching China's industrial, emissions, and patent databases. The baseline model finds that GPP significantly improves the energy efficiency of regulated firms, and further, the robustness of the regression results is verified by the substitution of explained variables, the exclusion of other contemporaneous policies, the reduction of self-selection bias, and a placebo test. The mechanism test confirms that GPP encourages regulated firms to optimize energy consumption structure, and promotes them to improve production processes and technology. The heterogeneity test show that GPP improves the energy efficiency of firms in the eastern and central regions, with stronger promotional utility among state-owned enterprises and large firms. Finally, based on input-output correlation data, this study explores the spillover effects of the policy in the production network, where the implementation of green procurement can improve the energy efficiency of key upstream industries.