Lobbying and Product Recalls: A Study of the U.S. Automobile Industry.

The article investigates the relationship between corporate lobbying and product recalls in the U.S. automotive industry, analyzing nine years of multisource data to assess how lobbying expenditures influence both voluntary recalls initiated by firms and mandatory recalls enforced by regulators such as the National Highway Traffic Safety Administration (NHTSA). Using an instrumental variable approach, the study finds that increased lobbying is significantly associated with fewer voluntary and mandatory recalls, with defect severity and media coverage moderating these effects; notably, media coverage can diminish lobbying's influence on recall decisions. The findings suggest that lobbying serves as a strategic tool for automotive firms to manage regulatory scrutiny and potentially secure preferential treatment, raising important considerations for consumer welfare, market competition, and public policy. The study highlights the role of media as an actionable mechanism for stakeholders to counterbalance lobbying's impact and calls for greater regulatory transparency to protect consumer interests.