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Corporate lobbying for environmental protection

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  • Felix Grey

    (Faculty of Economics, University of Cambridge)

Abstract

Much of the time, polluting firms lobby against environmental protection, but there are major exceptions to this rule, for example in the regulation of both ozone and greenhouse gases. Political support from firms can be pivotal for governments trying to protect the environment. I offer an explanation for this phenomenon, suggesting firms behave as they do in order to steal market share from their rivals. I develop a model in which a polluting firm makes a clean technology investment and then lobbies successfully for strong environmental protection, since this will shift market share away from its rival who has not made the clean investment. The key result concerns the impact of lobbying on the equilibrium outcome: for a region of the parameter space, it is only because of firms' lobbying that environmental protection is achieved. This is because lobbying increases a firm's returns to going green, by increasing the market share it can steel. The net effect of this distortion is an increase in welfare.
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Suggested Citation

  • Felix Grey, 2017. "Corporate lobbying for environmental protection," Working Papers EPRG 1714, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1714
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    3. van den Bergh, Jeroen, 2023. "Climate policy versus growth concerns: Suggestions for economic research and communication," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    4. Gren, Ing-Marie & Höglind, Lisa & Jansson, Torbjörn, 2021. "Refunding of a climate tax on food consumption in Sweden," Food Policy, Elsevier, vol. 100(C).
    5. Dolphin, Geoffroy & Pahle, Michael & Burtraw, Dallas & Kosch, Mirjam, 2022. "A Net-Zero Target Compels a Backwards Induction Approach to Climate Policy," RFF Working Paper Series 22-18, Resources for the Future.
    6. Jie Ouyang & Kezhong Zhang & Bo Wen & Yuanping Lu, 2020. "Top-Down and Bottom-Up Approaches to Environmental Governance in China: Evidence from the River Chief System (RCS)," IJERPH, MDPI, vol. 17(19), pages 1-23, September.
    7. Pauli Lappi, 2021. "Lobbying for size and slice of the quota," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(5), pages 1143-1162, October.
    8. Teun Schrieks & Julia Swart & Fujin Zhou & W. J. Wouter Botzen, 2023. "Lobbying, Time Preferences and Emission Tax Policy," Economics of Disasters and Climate Change, Springer, vol. 7(1), pages 1-32, March.
    9. Trinks, Arjan & Mulder, Machiel & Scholtens, Bert, 2020. "An Efficiency Perspective on Carbon Emissions and Financial Performance," Ecological Economics, Elsevier, vol. 175(C).
    10. Dapeng Cai & Jie Li, 2020. "Pollution for Sale: Firms’ Characteristics and Lobbying Outcome," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(3), pages 539-564, November.
    11. Kalk, Andrei & Sorger, Gerhard, 2023. "Climate policy under political pressure," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    12. Wang, Juan & Li, Jing & Zhang, Qingjun, 2021. "Does carbon efficiency improve financial performance? Evidence from Chinese firms," Energy Economics, Elsevier, vol. 104(C).
    13. Rebecca L. Perlman, 2020. "For Safety or Profit? How Science Serves the Strategic Interests of Private Actors," American Journal of Political Science, John Wiley & Sons, vol. 64(2), pages 293-308, April.

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    More about this item

    Keywords

    lobbying; environmental policy; political economics;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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