In democratic systems, lobbying may play an important role in national policymaking with possible welfare implications. Prior efforts to understand the influence of lobbying have been hampered by difficulties in observing lobbying benefits. To address this issue, we first use a prediction market event study to directly estimate the change in firm value under the Waxman-Markey bill, a prominent cap-and-trade climate policy considered by the U.S. Congress during 2009-2010. We then find a robust positive association between estimated changes in firm value and matched lobbying expenditures on the Waxman-Markey bill. To allow a structural interpretation of our reduced-form estimates, we nest a standard model of cap-and-trade regulation within a lobbying contest model. At the firm level, the average returns to lobbying over the Waxman-Markey bill exceed 400 percent. At the aggregate level, lobbying lowered the probability of the bill’s passage by up to 12 percentage points, corresponding to $45 billion in foregone global benefits from climate change mitigation. More broadly, these results demonstrate the importance of unifying public interest and public choice views of regulation.