Optimal Discounts in Green Public Procurement

We consider a Green Public Procurement setting where the procurer provides bid discount to environment-friendly technologies foster their use. assume that, before auction, firms may switch green technology via publicly observable costly investment. show that investment acts as signaling device. This mitigates effect of incomplete information on firms’ costs, thereby triggering more competitive bidding, which results in lower prices for procurer. Therefore, even with no preference toward can find it optimal use discount. Our challenge common perception always implies trade-off between environmental performance and purchasing price.