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Environmentally-Responsible Households: Irresponsible Corporate Lobbying

Author

Listed:
  • Olimpia Cutinelli-Rendina
  • Sonja Dobkowitz
  • Antoine Mayerowitz

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. auto- motive 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.

Suggested Citation

  • Olimpia Cutinelli-Rendina & Sonja Dobkowitz & Antoine Mayerowitz, 2025. "Environmentally-Responsible Households: Irresponsible Corporate Lobbying," Discussion Papers of DIW Berlin 2115, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp2115
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    More about this item

    Keywords

    Green Household Preferences; Directed Technical Change; Environmental Lobbying;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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