Environmentally-Responsible Households: Irresponsible Corporate Lobbying

Olimpia Cutinelli-Rendina (), Sonja Dobkowitz and Antoine Mayerowitz
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Olimpia Cutinelli-Rendina: LaRGE Research Center, Université de Strasbourg
Sonja Dobkowitz: DIW Berlin

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: How do firms respond to greener household preferences? We construct a novel index of environmental willingness to act on the state-quarter level based on Google Trends search data. Relating the index to firm-level information on the U.S. automotive sector from 2006 to 2019, we find ambiguous results. On average, firms innovate more in electric, hydrogen, and hybrid (clean) technologies and reduce combustion engine-related (dirty) innovation over time. However, firms also increase anti-environmental lobbying expenditures. We show that firms with a dirtier product portfolio tend to lobby more against stricter environmental regulation but also reduce R&D investment in dirty technologies to a greater extent. Firms’ reactions to greener household preferences are stronger and more persistent than responses to higher fuel prices. Moreover, greener preferences have the additional effect of lowering innovation in dirty technologies. We interpret these results as evidence that shifts in household preferences are highly effective in promoting a market-based green transition. However, they also imply more anti-environmental lobbying, thereby complicating environmental policymaking.

Keywords: Green Household Preferences; Directed Technical Change; Environmental Lobbying. (search for similar items in EconPapers)
JEL-codes: D70 D9 O3 P28 Q55 (search for similar items in EconPapers)
Date: 2025
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