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The adoption of economically competitive and non-competitive climate change policies are tested as a function of internal determinants of states and two mechanisms for policy diffusion: the traditional neighboring states model for policy diffusion, and a specification that tests whether states learn from peer groups. These results are compared with census regions and sub regions. We find strong evidence for state learning within peer groups but less support for diffusion across state borders. Highly competitive policies do not exhibit differing patterns of diffusion when compared with low competition policies. There are powerful relationships between state characteristics – and in particular – the political culture of states and climate change policy adoption. These results also suggest that restricted models that test the neighboring states model likely omit important characteristics that are correlated across states, leading to incorrect findings regarding the neighboring state diffusion model in extant literature. These results call into question the use of the neighboring states model while providing additional direction for future research regarding the mechanisms of policy diffusion. 2