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In response to growing environmental concerns, governments have promoted products that are less harmful to the environment—green products—through various incentives. We empirically study the impact of a commonly used nonmonetary incentive—namely, the single-occupancy permission to high-occupancy vehicle (HOV) lanes—on green and non‐green product demand in the U.S. automobile industry. The HOV incentive could increase unit sales of green vehicles by enhancing their functional value through time saving. On the other hand, the incentive may prove counterproductive if it reduces the symbolic value (i.e., signaling a proenvironmental image) consumers derive from green vehicles. Assessing the effectiveness of green-product incentives is challenging, given the endogenous nature of governments’ incentive provisions. To identify the effect of the HOV incentive on unit sales of green and non …