Impacts of green public procurement on eco-innovation: evidence from EU countries

Abstract

Enhancing eco-innovation is essential to simultaneously achieving goals of environmental protection and economic development. Besides technological push and market demands, the drivers and determinants of eco-innovation could also be institutional and regulatory factors. While scholars have been examining the effects of environmental regulations on eco-innovation, there is still a lack of research on the effects of economic incentives created by environmental policies. In response, this article investigates the impacts of green public procurement (GPP) on eco-innovation by examining contract award notices from 28 European countries during 2010–2018. The article extracts green contract ratio and applies static and dynamic panel data analyses to estimate its effects on eco-innovation index. The results show that use of green award criteria in public procurement can improve eco-innovation performance, albeit with a decreasing margin. This study concludes that appropriately designed GPP, by providing incentives of compliance, can effectively drive environmental innovations.