Working Paper | HBS Working Paper Series | 2013

Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California

by Timothy Simcoe and Michael W. Toffel

Abstract

We investigate whether government green procurement policies stimulate private-sector demand for similar products and the supply of complementary inputs. Specifically, we measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the US 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 adopters.

Keywords: Public procurement; green building; quality certification; environmental policy; Buildings and Facilities; Law; Markets; Supply Chain; Risk and Uncertainty; Business and Government Relations; Real Estate Industry; Construction Industry; Public Administration Industry; California;

Citation:

Simcoe, Timothy, and Michael W. Toffel. "Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California." Harvard Business School Working Paper, No. 13-030, September 2012. (Revised September 2013. Revise and resubmit at Journal of Environmental Economics and Management.)