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The Global Diffusion of Environmental Clubs:
How Pressure from Importing Countries Supports The Chemical Industry’s Responsible Care Program

World Development, 2020, Vol. 127, March, 104735.

Ellen Holtmaat, Christopher Adolph, and Aseem Prakash

Environmental clubs have proliferated across sectors and issue areas. We examine the diffusion of the chemical industry’s Responsible Care (henceforth, RC) program. Much of the work on the diffusion of clubs has focused on the demand side: why firms join these clubs despite the costs of doing so. There is some work focusing on the supply side: why actors establish or create a new club. However, there is virtually no work examining why national-level industry associations decide to subscribe to an existing global environmental club in order to make it available to their members. Industry organizations in 67 countries, of which 25% lower and middle-income countries have joined RC. In this paper, we ask, what motivates this subset of national associations to join RC? Drawing on an original dataset of RC global diffusion in 195 countries (1985–2017), we estimate a Cox proportional hazards model of the risk of joining RC. We find that RC adoption is more likely when a country exports chemicals to other countries that have joined RC (the California effect) and is unaffected by the total volume of its chemical trade. Thus, while exposure to global markets per se may not influence the RC adoption, incentives change considerably when countries’ key importers signal their support for these environmental practices. In addition, peer-pressure and learning matter: RC adoption is more likely when countries in close physical vicinity (within 500 miles) have joined the club. Finally, domestic factors play a role as well: both the level of democracy and the size of the economy encourage national associations to join RC.

Replication:  Data and code to reproduce the main results can be found here.

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