The Volkswagen emissions scandal: Exploring the role of environmental concern and social norms

M. Marino, Pierpaolo Parrotta, D. Sala and G. Valletta

Journal of Environmental Economics and Management, 2024, vol. 127, issue C

Abstract: Nearly a decade after the 2015 emissions scandal, Volkswagen has transitioned from marketing deceptive ‘clean engine cars’ to becoming a major player in the electrification of the automotive industry. Yet, the violation of environmental standards during the scandal resulted in excessive pollutant emissions, posing persistent threats to health and the environment. This paper explores how consumers held Volkswagen accountable for these hazards. Our analysis reveals that the decline in Volkswagen’s sales volumes following the scandal was driven by environmentally concerned consumers globally. However, their reaction was short-lived and mainly limited to the models implicated by the U.S. Environmental Protection Agency. Interestingly, we find no evidence of lost sales to competitors. Instead, we document a within-brand or within-group shift in favor of Volkswagen models compliant with environmental regulations. This phenomenon could be one of the contributing factors explaining Volkswagen’s resilience in navigating the fallout from the scandal.

Keywords: Emissions scandal; Automotive industry; Environmental concern; Cultural tightness; Difference-in-difference (search for similar items in EconPapers)
JEL-codes: C21 D12 L15 L62 Q59 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:127:y:2024:i:c:s0095069624000937

DOI: 10.1016/j.jeem.2024.103019

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