Early adopters, firm survival, and environmental policy: dry cleaners in the South Coast Basin of California

Abstract

This paper examines the relationship between the early adoption of new technologies, the probability of firm survival, and environmental regulations through a case study of dry cleaners in the South Coast Basin of California (SC Basin). Most dry cleaners use machines that use the toxic chemical perchloroethylene (PERC) to clean garments. PERC vapors are emitted into the ambient air during the dry cleaning process and can cause cancer in people who live and work nearby. In 2002, the South Coast Air Quality Management District (AQMD) required all dry cleaners in the region to purchase a costly alternative machine that used a non-toxic cleaning solvent by the year 2020. Using bivariate and multivariate analysis, we found that the timing of the early adoption of non-PERC machines among dry cleaners was optimal, ceteris paribus, and adopting early did not have a negative effect on the probability of surviving.