Linking Public and Private Politics: Activist Strategy for Industry Transformation VERY PRELIMINARY

We build a model of activist campaigns against corporations that captures both their direct impact through private politics, and their indirect impact through changing targeted firms’ incentives to engage in public politics. A strategic activist seeks to transform the behavior of an industry, and influence it to adopt a costly green technology that will reduce environmental damages. To do so, the activist can mount a campaign to convince one or more firms in an industry to adopt the green technology. The activist considers both the direct environmental benefits of a firm’s adoption, as well as its indirect effects through changes in the industry’s lobbying behavior. We characterize the activist’s optimal strategy and how it varies with underlying variables such as the cost of the alternative technologies, environmental benefits of technology adoption, and cost heterogeneity within the industry.