The Role of Investment in Environmental Lobbying Contests

This paper establishes that a lobbying stage following investment decisions regarding abatement technology may imply a positive strategic effect of investment, pointing to relatively more investment in pollution abatement technologies than without lobbying. The intuition is that polluting firms may choose to implement more advanced abatement technology as a credible commitment device in order to lower the investment of environmentalists in the lobbying contest that will ultimately determine whether or not an emissions tax is introduced. Copyright Springer Science+Business Media Dordrecht 2013