Social Policies in Public Procurement – do they cut through to the Private Sector?

One of the justifications for using public procurement as a tool to drive “horizontal” policies (concerning sustainability for example) is that it is a means by which governments can apply their considerable purchasing power positively to influence procurement behaviour more generally.

The ideal is that the private sector looks and learns and the social objectives of government AR gradually absorbed, developed and delivered by the private sector also.

This paper presented by Timothy Simcoe (Boston University) and Michael Toffel (Harvard Business School) explores the evidence for this effect in terms of bleed through of public procurement requirements in the USA to adopt LEED standards into the private sector.

“We measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and supplier investments in green building expertise. Our findings suggest that government procurement policies can accelerate the diffusion of new environmental standards that require coordinated complementary investments by various types of private adopter.”

The full paper is here:

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