The Complementary Role of Liability and Safety Regulation
TLDR
In this paper, the authors show that when the victim's compensation is partial (e.g., due to death or serious bodily injury), there are inefficiencies associated with the exclusive use of ex-post liability.Abstract:
This article deals with the control of hazardous activities in situations where potential victims can affect their exposure to risk. Economists have generally considered ex ante regulation (safety standards) to be a substitute for ex post policies (exposure to tort liability) in order to control externalities. We show that when the victim’s compensation is partial (e.g., due to death or serious bodily injury) there are inefficiencies associated with the exclusive use of negligence liability and that an optimal policy may involve the combined use of ex-ante regulation and ex-post liability. A noteworthy feature of our explanation is that regulation is complementary to liability, in the sense that it may facilitate a higher and more efficient standard of negligence. In that case, it is efficient to set the regulatory safety standard below the standard of negligence, which is consistent with the legal doctrines of negligence per se and the (non) regulatory compliance defense.read more
Citations
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闡釋《社會成本問題》[The Problem of Social Cost]
R. H. Coase,陳坤銘 +1 more
Abstract: THIS paper is concerned with those actions of business firms which have harmful effects on others. The standard example is that of a factory the smoke from which has harmful effects on those occupying neighbouring properties. The economic analysis of such a situation has usually proceeded in terms of a divergence between the private and social product of the far' ory, in which economists have largely followed the treatment of Pigou in The Economics of Welfare. The conclusions to which this kind of analyris seems to have led most economists is that it would be desirable to make the owner of the factory liable for the damage caused to those injured by the smoke, or alternatively, to place a tax on the factory owner varying with the amount of smoke produced and equivalent in money terms to the damage it would cause, or finally, to exclude the factory from residential districts (and presumably from other
Journal ArticleDOI
Product regulation or protectionism?
Limor Hatsor,Artyom Jelnov +1 more
TL;DR: In this article , the authors provide a theoretical analysis that underpins the puzzle in intent of regulatory restrictions on imports, allowing for ex-ante or ex-post inspection by the regulator (before or after the product is purchased).
References
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Book
The Problem of Social Cost
TL;DR: In this paper, it is argued that the suggested courses of action are inappropriate, in that they lead to results which are not necessarily, or even usually, desirable, and therefore, it is recommended to exclude the factory from residential districts (and presumably from other areas in which the emission of smoke would have harmful effects on others).
闡釋《社會成本問題》[The Problem of Social Cost]
R. H. Coase,陳坤銘 +1 more
Abstract: THIS paper is concerned with those actions of business firms which have harmful effects on others. The standard example is that of a factory the smoke from which has harmful effects on those occupying neighbouring properties. The economic analysis of such a situation has usually proceeded in terms of a divergence between the private and social product of the far' ory, in which economists have largely followed the treatment of Pigou in The Economics of Welfare. The conclusions to which this kind of analyris seems to have led most economists is that it would be desirable to make the owner of the factory liable for the damage caused to those injured by the smoke, or alternatively, to place a tax on the factory owner varying with the amount of smoke produced and equivalent in money terms to the damage it would cause, or finally, to exclude the factory from residential districts (and presumably from other
Book
Law and Economics
Robert D. Cooter,Thomas Ulen +1 more
TL;DR: In this paper, an Introduction to Law and Economics is presented, along with a review of Microeconomic Theory and its application in the Law and Legal Process, and an economic theory of the legal process.
Book
Foundations of Economic Analysis of Law
Steven Shavell,Steven Shavell +1 more
TL;DR: The authors provides a comprehensive, economically-oriented treatment of the basic areas of law, namely, property law, tort law, contract law, and criminal law, with a focus on welfare economics, morality, and law aimed at a broad audience.
Journal ArticleDOI
A model of the optimal use of liability and safety regulation
TL;DR: In this paper, a model of the occurrence of accidents is used to examine liability and safety regulation as a means of controlling risks, and neither liability nor regulation is necessarily better than the other, and as is stressed, their joint use is generally socially advantageous.
Related Papers (5)
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