Does Industry Self-Regulation Reduce Accidents? Responsible Care in the Chemical Sector
Stephen R. Finger
University of South Carolina - Moore School of Business
University of Pittsburgh - Graduate School of Public and International Affairs
November 18, 2011
This is the first study to evaluate the impact of self-regulation on industrial accidents. We examine Responsible Care in the US chemical manufacturing sector using our author- constructed database of 1,867 firms that own 2,963 plants between 1988 and 2001. Firms’ self- selection into RC is instrumented using pollution-related regulatory pressure on firms that influences their probability of joining RC, but not plant-level accidents. The average treatment effect on the treated indicates that RC reduces the likelihood of accidents by 2.99 accidents per 100 plants in a given year. This 69.3% reduction in the likelihood of accidents, accounting for the plants that participate in RC, translates to back-of-the-envelope avoided losses of $0.8 billion to $3.8 billion per year. RC also reduces the likelihood of more narrowly-defined accidents, i.e., process safety accidents and accidents related to violations of RC codes, by 5.75 accidents per 100 plants in a given year or by 85.9%.
Number of Pages in PDF File: 60
Keywords: Corporate Social Responsibility, Industry Self-Regulation, Industrial Accidents, Process Safety, Environmental and Health Safety
JEL Classification: Q53, Q58, L51, L65, D21working papers series
Date posted: March 3, 2012
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