Polluters and Collective Action: Theory and Evidence

We suggest a new perspective on firms' ability to organize collective action. We argue that industries that face a greater number of regulations have an easier time forming a lobby group and sustaining joint lobbying efforts. In particular, firms in industries that are pollution intensive, and therefore incur abatement costs, face an extra policy issue compared with other industries. The prediction that emerges from the theory is that more polluting industries should have greater levels of lobbying contributions. Using U.S. manufacturing sector data, we find empirical support for this hypothesis.