Environmentally-Responsible Households : Irresponsible Corporate Lobbying ?

How do firms respond to greener household preferences? We construct a novel index of environmental willingness to act and relate it to firm-level information on the U.S. automotive sector from 2006 to 2019. We find that firms persistently redirect innovation from conventional combustion technologies toward technologies that mitigate their emissions and electric vehicle technologies. However, we also uncover that firms pursue strategies consistent with deterring competition: (anti-environmental) lobbying and strategic patenting. On aggregate, a 1% increase in the growth rate of the index has effects similar to a 50% increase in fuel price growth.