---
type: source
title: "There's Money in the Air: The CFC Ban and DuPont's Regulatory Strategy"
author: "James W. Maxwell, Forest Briscoe (Business Strategy and the Environment)"
url: https://onlinelibrary.wiley.com/doi/abs/10.1002/(SICI)1099-0836(199711)6:5%3C276::AID-BSE123%3E3.0.CO;2-A
date: 1997-11-01
domain: grand-strategy
secondary_domains: []
format: academic-paper
status: processed
processed_by: leo
processed_date: 2026-04-21
priority: high
tags: [montreal-protocol, DuPont, regulatory-strategy, industry-capture, governance-mechanisms, first-mover, prisoner-dilemma]
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

Maxwell & Briscoe (1997) in *Business Strategy and the Environment*. Analyzes DuPont's reversal from CFC regulation opponent to supporter in 1986.

Key findings:
- CFC patents held by DuPont were aging and losing profitability by the mid-1980s. CFCs were becoming a commodity with eroding margins.
- DuPont's HCFC/HFC substitutes were newly patent-protected
- A global CFC ban would force the market to buy DuPont's patent-protected alternatives at higher margins
- International regulation offered DuPont "new and more profitable chemical markets at a time when CFC production was losing its profitability and promising alternative chemicals had already been identified"
- The 1986 reversal was a strategic calculation: DuPont would gain more from a ban that obsoleted competitors' unpatented CFC production and drove volume to DuPont's patent-protected substitutes than it would lose from the CFC phase-out
- DuPont invested approximately $500 million in substitute development post-protocol

The broader structural insight: industry support for governance is achievable when the leading players can position themselves as suppliers of the compliant alternative. The CFC/HFC regime gave DuPont exactly this position — it converted a regulatory threat into a competitive moat.

## Agent Notes
**Why this matters:** This paper provides the clearest articulation of the DuPont mechanism — the industry-side structural condition that made Montreal Protocol success possible. It's the "DuPont calculation": you can obtain leading-player support for governance when (a) the regulated technology is losing patent protection/margins, (b) the player holds patents on the compliant substitute, (c) the governance regime creates mandatory migration to the substitute. The question for AI governance: is there any AI lab that could be positioned analogously? Current answer is no — all major labs are racing because the competitive advantage is in deployment, not in safety-compliant substitutes.

**What surprised me:** The DuPont pivot was entirely self-interested, not coerced. There was no external threat — just a strategic calculation about patents. This makes the mechanism much cleaner than the "government pressure" narrative. And cleaner mechanisms are more replicable: if you can engineer the conditions for a DuPont calculation, you can get industry support without coercion.

**What I expected but didn't find:** Evidence that DuPont actively lobbied for stringent regulations to disadvantage competitors (the Peltzman/Stigler "regulatory capture" hypothesis). The paper describes strategic support but stops short of showing DuPont pushed for the strictest possible timeline.

**KB connections:**
- [[binding-international-governance-requires-commercial-migration-path-at-signing-not-low-competitive-stakes-at-inception]] — this IS the commercial migration path mechanism
- [[voluntary-ai-safety-constraints-lack-legal-enforcement-mechanism-when-primary-customer-demands-safety-unconstrained-alternatives]] — the inverse of this: what happens when the primary customer demands safety-constrained alternatives?
- [[commercial-interests-blocking-condition-operates-continuously-through-ratification]] — the DuPont case shows commercial interests can SUPPORT governance when the patent structure is right

**Extraction hints:** Main claim: "Industry support for international technology governance is achievable when leading firms hold patents on compliant substitutes and the governance regime creates mandatory migration from the regulated technology to the substitute — DuPont's 1986 reversal on CFC regulation demonstrates the mechanism." This is a direct counter to the "commercial interests always block governance" claim in the KB.

**Context:** This paper is essential background for understanding why the Montreal Protocol succeeded while climate and AI governance have not. The "DuPont calculation" is the key variable: climate governance failed partly because fossil fuel incumbents have no analogous patent-protected substitute that benefits from mandatory migration. AI governance currently lacks a player in DuPont's position.

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: [[binding-international-governance-requires-commercial-migration-path-at-signing-not-low-competitive-stakes-at-inception]]
WHY ARCHIVED: DuPont mechanism is the clearest example of "industry self-interest supporting governance" — a critical missing condition in AI governance
EXTRACTION HINT: Extract: "Leading-firm support for technology phase-out governance requires patent-protected substitutes + mandatory migration path — DuPont's 1986 CFC reversal shows the mechanism operates through self-interest, not coercion, and is therefore engineerable."
