Does Peer Adoption Increase the Diffusion of Pollution Prevention Practices?

Voluntary adoption of pollution prevention (P2) practices has been used to reduce toxic emissions in the US. Spillovers among facilities owned by the same firm likely play an important role in the diffusion of P2 practices. This paper estimates the intrafirm spillover effects of P2 adoption. Using instrumental variables methods applied to facility panel data from the Toxics Release Inventory, we find that a facility’s own adoption of P2 practices increases in response to greater P2 adoption by facilities from the same firm. Intrafirm spillovers are stronger among small firms and firms with higher degree of sibling homophily.