When the weak win: The role of investment in environmental lobbying

Old and environmentally damaging industries often lobby effectively for les s stringent regulations and are slow to adopt new and cleaner technologies. This paper explains the lobbying success of these industries in terms of t he strategic role of investment as a credible commitment device. It is demo nstrated that if governments are predisposed to special interest groups. un derinvestment in new technology enables firms to lobby more effectively. Su ch industries are shown to be better placed to extract policy concessions. despite contributing less to the government in political donations. The ana lysis therefore suggests that political considerations may provide a signif icant incentive for firms to reject environmentally beneficial investments, even when these lower production costs. (C) 2001 Academic Press.