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

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.