Showing papers on "Damages published in 1997"

Legal regimes, audit quality and investment

Abstract: This paper presents an analytical model that explores the impact of auditors' legal liability on audit quality and investment. The model is particularly concerned with the impact of damage measures on investments. The threat of liability payments creates an incentive for the auditor to work hard; however, the potential liability payments can also provide an "insurance" for investors in the event the state of nature is bad. Indeed, if damages are measured based on actual investments, investors can increase the liability payments by over-investing. Thus, the potential transfer of wealth from auditors to investors can lead to an overinvestment in risky assets, relative to a socially optimal level, even with a high-quality audit. A socially optimal level of investment can be induced by removing the association between actual investments and liability payments. In my model, a legal regime that can induce the socially optimal level of investment, while still motivating the auditors to exert the socially optimal effort level, consists of a strict liability rule with a damage measure that is independent of the actual investment.

Restoration-based compensation measures in natural resource liability statutes

Abstract: I. INTRODUCTION In the United States, the atmosphere, oceans, estuaries, rivers, and plant and animal species are public trust resources. For the most part, the United States has not created private ownership rights to these resources but instead has established a system of public management to promote beneficial uses of the resources at no (or limited) charge to the public. In the past two decades, public policies have emphasized protecting the resources from injury and depletion. In particular, several major environmental statutes enacted in the 1970s designate resource management agencies as trustees of the natural resources on behalf of the public and enable the trustees to recover damages for injuries to public resources from releases of hazardous substances and discharges of oil. The primary federal statutes containing provisions establishing liability for injuries to natural resources in the public trust are the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, more commonly known as Superfund) and the Oil Pollution Act (OPA). When OPA was promulgated in 1990, its natural resource liability provisions for oil spills superseded those previously established in the Clean Water Act in 1978. Other federal statutes containing natural resource trustee provisions include the National Marine Sanctuaries Act (formerly the Marine Protection, Research, and Sanctuaries Act), the Federal Water Pollution Control Act (or Clean Water Act), Deepwater Port Act of 1974, Outer Continental Shelf Lands Act Amendment of 1978, and Trans-Alaska Pipeline Authorization Act. These statutes broadly define natural resources to include land, fish, wildlife, biota, air, water, ground water, drinking water supplies, and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by the United States, any state or Indian tribe, or any foreign Government. The U.S. Department of the Interior promulgated regulations in 1986 and 1987 for natural resource damage assessments (NRDA) under CERCLA and subsequently revised the regulations in 1994 to respond to issues remanded to the agency by Ohio v U.S. Department of the Interior in 1994, as codified at 43 CFR [section]11. The National Oceanic and Atmospheric Administration (NOAA) promulgated NRDA regulations for OPA on January 5, 1996, as codified at 15 CFR [section]990. The standard measure of damages is the cost of restoring the resources to baseline conditions ("primary restoration") plus the interim loss in value from the time of the incident until full recovery. However, trustees are allowed to spend their recoveries only on enhancing or creating ("restoring, rehabilitating, replacing or acquiring the equivalent of") natural resources. The statutory restriction on the use of the recoveries has motivated the development of an alternative utility-theoretic measure of damages for interim losses - the cost of "compensatory restoration" actions providing inkind compensation. In the aftermath of the 1991 Exxon Valdez settlement, the use of contingent valuation became very controversial during the OPA rulemaking process (as it continues to be in the ongoing CERCLA reauthorization process). During the rule-making, industry and environmental interest groups as well as academic economists submitted extensive public comments on valuation issues in general and contingent valuation in particular. In the context of the wide-ranging public debate, NOAA reframed the concept of damages for interim losses in terms of providing compensatory restoration projects. Congress is currently considering bills to reauthorize CERCLA that would incorporate these concepts in statutory language. Reframing the damage claim brings several advantages. The revised format forces trustees to focus on the ultimate statutory goal - restoring resources - from the beginning of the assessment process, which may result in expediting restoration. …

International environmental negotiations : strategic policy issues

Abstract: Heterogenous international environmental agreements, S. Barrett burden-sharing and coalition stablilty in environmental negotiations with asymmetric countries, M.Botteon and C.Carraro international negotiations and dispute resolution mechanisms - the case of environmental negotiations, P.Jehiel and O. Compte R&D co-operation and the stability of international environmental agreements, C. Carraro and D. Siniscalco R&D spillovers, R&D co-operation, innovation and international environmental agreements, Y. Katsoulacos international environmental agreements and asymmetric information, O. Chillemi the interaction between international environmental and trade policies, M. Le Breton measuring benefits and damages from Co2 emmisions and international agreements to slow down greenhouse warming, A. Yiannaka and A. Xepapadeas the stability of international environmental coalitions with farsighted countries - some theoretical observations, G. Ecchia and M. Mariotti.

Effect of Blameworthiness and Outcome Severity on Attributions of Responsibility and Damage Awards in Comparative Negligence Cases

Abstract: We studied the effects of accident victims' legal blameworthiness and the severity of their injuries on determinations of responsibility and damage awards. In general, participants tended to ascribe more fault to victims than warranted by the facts presented, displaying an antiplaintiff bias. When attributing fault and awarding damages, they were especially sensitive to the blameworthiness of the victim when the consequences of the accident were severe rather than mild. These findings appeared not to be mediated by emotional reactions to the victims. Participants tended to conflate issues of liability with what ought to have been the legally distinct question of damages. They appeared to decide comparative negligence awards not by determining percentage fault and gross damages as discrete items and then computing their product, as the law prescribes, but rather by using more holistic judgmental processes.

The Damages Lottery

Abstract: Part 1: the law of negligence strict liability intentional torts liability for how much? who pays? suing and settlements legal aid and "no win, no fee" cases. Part 2: stretching the concept of fault stretching the law where the defendant is not solely to blame stretching the rules of causation stretching the kinds of injury you can claim damages for. Part 3: stretching the damages which can be awarded stretching the number of people you can sue more stretching of the people you can sue - public authorities has the stretching gone too far?. Part 4: claims for personal injuries road accidents industrial accidents. Part 5: the guilty parties do not pay the public pays the consequences of recognising that the public pay the insurance companies who pays in contractual cases?. Part 6: the law encourages the blame culture the system is a lottery the system is inefficient how have we got into this mess?. Part 7: punishment and deterrence economic considerations public accountability. Part 8: a new look at the whole system of civil liability personal injuries - some dead ends the way ahead - road accidents the way ahead - other accidents and injuries.

Uncertainty, learning and international environmental policy coordination

Abstract: In this paper we construct a simple model of global warming which captures a number of key features of the global warming problem: (i) environmental damages are related to the stock of greenhouse gases in the atmosphere; (ii) the global commons nature of the problem means that these are strategic interactions between the emissions policies of the governments of individual nation states; (iii) there is uncertainty about the extent of the future damages that will be incurred by each country from any given level of concentration of greenhouse gases but there is the possibility that at a future date better information about the true extent of environmental damages may become available; an important aspect of the problem is the extent to which damages in different countries may be correlated. In the first part of the paper we consider a simple model with two symmetric countries and show that the value of perfect information is an increasing function of the correlation between damages in the two countries in both the cooperative and non-cooperative equilibria. However, while the value of perfect information is always non-negative in the cooperative equilibrium, in the non-cooperative equilibrium there is a critical value of the correlation coefficient below which the value of perfect information will be negative. In the second part of the paper we construct an empirical model of global warming distinguishing between OECD and non-OECD countries and show that in the non-cooperative equilibrium the value of perfect information for OECD countries is negative when the correlation coefficient between environmental damages for OECD and non-OECD countries is negative. The implications of these results for international agreements are discussed.

The flood events of 1993/1994 and 1995 in the Rhine River basin

Abstract: The causes of the Rhine floods of 1993/1994 and 1995 are described and compared with those of historic events. Information is given on damages and about consequences drawn at national and international levels.

The Global Lysine Price-Fixing Conspiracy of 1992–1995

Abstract: Market structure and the corporate decision-making practices of several multinational corn refiners fostered implementation of the largest price-fixing conspiracies in modern times. These events have renewed the attention of U.S. antitrust authorities in prosecuting international cartels. Archer Daniels Midland (ADM) and its co-conspirators' direct overcharges to lysine buyers during 1992 through 1995 amounted to at least $70 million, and the total public penalties, private damages, and legal costs exceed $200 million. Price-fixing perpetrators now face monetary exposures five times the amount of the harm imposed on buyers.

Are Punitive Damages Really Insignificant, Predictable, and Rational? A Comment on Eisenberg et al.

Abstract: This comment on an empirical study of punitive damages by Theodore Eisenberg and several coauthors makes three main points. First, contrary to what they imply, punitive damages may be a significant factor in litigation despite the fact that only a small fraction of cases in their sample involve punitive damage judgments. Second, notwithstanding their interpretation, their results are consistent with the possibility that punitive damages are awarded on a random basis. Third, in opposition to their suggestion, punitive damages may not be rational even if the level of punitive damages is systematically and positively related to the level of compensatory damages.

An Economic Analysis of Damages Rules in Intellectual Property Law

Abstract: In this article, we apply economic analysis in an effort to derive the optimal damages rules for use in patent, trade secret, copyright, and trademark disputes. We proceed on the basis of two key assumptions: first, that in order to preserve the intellectual property owner's incentives to create, publish, or maintain quality control, the owner should never be rendered worse off as a result of an infringement; and second, that in order to preserve the property-like character of intellectual property rights, the infringer should never be rendered better off as a result of the infringement. On the basis of these assumptions, we conclude that the general damages rule for use in intellectual property disputes should be that the prevailing plaintiff recovers the greater of either her actual damages or the defendant's profits attributable to the infringement, with the possibility of a damages enhancement as a means of deterring infringements that are difficult to detect. We then discuss three ways in which the rules that actually govern in intellectual property disputes depart from this model--the absence of a restitutionary remedy in patent law; the use of "statutory damages" in copyright law; and the limitation on the recovery of restitutionary damages in trademark law- and consider whether these departures from the model can be viewed as rational adaptations to certain specific features of these bodies of law.

Harm to the environment : the right to compensation and the assessment of damages

Abstract: This collection of essays by a group of international environmental law experts focuses on the growing and controversial international debate about environmental damage. Rules concerning liability and compensation come into play when administrative regulations have failed to prevent the occurrence of environmental damage. After such occurrence interest focuses upon the question of compensation either in the form of reinstatement of the environment or, if that is not possible or economically feasible, by making financial compensations. The essays in this volume address the current state of the law in the US and Europe and pose questions about its future development.

Archer daniels midland: price fixer to the world

Abstract: Both market structure and corporate practices of Archer Daniels Midland fostered the implementation of the largest price-fixing conspiracies seen in modern times. The overcharges imposed on U.S. buyers of lysine and citric acid during 1994-1995 by ADM and its co-conspirators amounted to at least $250 million, and the total amount of public penalties, private damages, and legal costs exceeds $666 million. Perpetrators of price-fixing now face monetary exposures that are five times the amount of the harm caused to buyers. These events have spurred renewed attention by U.S. antitrust authorities in prosecuting international cartels.

Transportation and Air Pollution: The Environmental Damages

Abstract: This paper examines estimates of the damages caused by air pollution emissions from transportation sources. The paper first provides a summary of dollar per gallon air pollution damage estimates from twenty studies. Next, new nationwide estimates of damages associated with air emissions are presented. Finally, three key issues in the estimation of damages are discussed.

Nonmarket valuation and the courts: the case of the exxon valdez

Abstract: I. INTRODUCTION On March 24, 1989, the tanker vessel Exxon Valdez went aground on Bligh Reef in Prince William Sound, Alaska, and subsequently spilled 11 million gallons of oil into the marine environment. The Exxon oil spill litigation may well be the major environmental case of this century. The September 1994 jury award of $5 billion in punitive damages is the largest ever in a pollution case and the second largest in a civil case in the United States. In phase two of the trial, the jury also awarded substantial compensatory damages of $286.8 million to commercial fishermen. The other major plaintiff, the Alaska native class, settled for $20 million just prior to going to trial. This paper focuses on compensatory damages from the perspective of four different realities: (i) economic theory ("in principle" the appropriate measure of damages), (ii) legislation and related regulatory guidelines (such as Comprehensive Environmental Response, Compensation, and Liability Act [CERCLA] and Oil Pollution Act [OPA] and the U.S. Department of the Interior [DOI] natural resource damage regulations codified at 43 CFR part 11), (iii) the court's interpretation of the law (what the presiding judge rules to be legally admissible), and (iv) the jury verdict. Identifying reliable methods for measuring the value of nonmarket resources is an important current policy problem. The DOI and the National Oceanic and Atmospheric Administration (NOAA) are in the process of establishing regulatory guidelines for implementation of the Clean Water Act and CERCLA (59 Fed. Reg. 14262) and the OPA of 1990 (59 Fed. Reg. 1062). The set of plausible alternative procedures is finite and includes: (i) market prices, (ii) travel cost methods, (iii) hedonic methods, (iv) factor income, and (v) contingent valuation (e.g., 59 Fed. Reg. at 1182). (Sections IV.A and V.B below define the specific methods applied in the case at hand.) Contingent valuation has received considerable attention because it is the only method potentially capable of measuring so-called passive use values. In the Exxon Valdez public trustees case, plaintiffs used contingent valuation to value injury to Prince William Sound (Carson et al., 1992). The defendant's strategy involved funding studies that critically examined the contingent valuation methodology rather than directly estimating potential passive use losses (Hausman, 1993). As a result of the debate initiated by these two sets of studies, a select panel including several Nobel laureates in economics reviewed contingent valuation (Arrow et al., 1993). The use of contingent valuation to estimate passive use losses remains controversial (Hanemann, 1994; Diamond and Hausman, 1994). While recent attention has focused on contingent valuation, a long-standing and extensive economics literature examines all of these valuation methodologies (recent overviews include Desvousges and Skahen, 1987; Ward and Duffield, 1992; and Kopp and Smith, 1993). But how acceptable are these methods in the courts? Judges and juries provide a very different litmus than the test of peer review by fellow economists. In a review of several cases, Cummings (1991) concludes that frequently the courts uncritically accept and inappropriately apply economic paradigms. Certainly the court environment is more demanding in terms of whether a given method seems reasonable and is readily communicated. The Exxon Valdez trial is of particular interest from this standpoint. One of the major plaintiff groups, the Alaska native class, submitted a claim for lost subsistence use. While subsistence is one of the basic types of services associated with natural resources that is specifically listed in the NOAA Proposed Rules (59 Fed. Reg. at 1140), little work exists on the development of valuation approaches for this type of resource service (for a review of this literature, see Brown and Burch, 1992). Both plaintiffs and defendants in this case implemented a hedonic approach for valuing lost subsistence use. …

Structure ignition assessment can help reduce fire damages in the w-ui

Abstract: This article, in part, was presented at the Food and Agriculture Organization of the United Nations/ Economic Commission for Europe/International Labour Organization seminar on Forest, Fire, and Global Change in shushenskoye (Russian Federation) in August 1996. firefighting technology and management have produced the most effective firefighting capabilities in history, these advances have not prevented large losses during recent W-UI fires. Severe W-UI fires can destroy whole neighborhoods in a few hours-much faster than the response time of the best firefighting services.

Guidance Rules and Enforcement Rules: A Better View of the Cathedral

Abstract: Contemporary economic analysis of law is a product of the confluence of standard microeconomics with a legal tradition heavily influenced by American Legal Realism. The effect of this merger has been an analysis of legal institutions from the perspective of the Holmesian "bad man," who sees predicted legal actions as merely various expected material costs or benefits to be taken into account. This might be illuminating for the purposes of an "outsider," such as a sociological behaviorist or perhaps even a legal advisor alerting her "bad man" client to the risks of adverse legal consequences. But it produces bizarre results when used in an attempt to understand basic legal concepts, such as the notion of property, that in fact reflect the perspective of "insiders," that is, persons who try to shape the law to achieve various purposes and those citizens who willingly conform their conduct to the law's requirements. The resulting distortion is demonstrated by an analysis of Calabresi and Melamed's famous article, "Property Rules, Liability Rules, and Inalienability: One View of the Cathedral." It is shown that, once one attends to the insider's perspective, the categories of property, liability, and inalienability must be understood as categories of directives addressed to law-abiding citizens, rather than as categories of remedies or enforcement mechanisms, as the now conventional view would have it. Recognizing this allows one to open up the discussion of what form of enforcement is appropriate as to any particular rule instantiating any particular category. In particular, it allows one to distinguish between a liability rule, on the one hand, and a property rule that is protected only by a compensatory damages remedy. Conventional law and economics cannot perceive such distinctions and thus has a distorted "view of the cathedral." In the end, the culprit responsible for this distortion is not economics, but the Holmesian "bad man" jurisprudence within which economics has often been applied. Relegating the latter to particular contexts of demonstrated relevance stands to improve our thinking about the relationship between law and economics.

Guidance Rules and Enforcement Rules: A Better View of the Cathedral

Abstract: Contemporary economic analysis of law is a product of the confluence of standard microeconomics with a legal tradition heavily influenced by American Legal Realism. The effect of this merger has been an analysis of legal institutions from the perspective of the Holmesian "bad man," who sees predicted legal actions as merely various expected material costs or benefits to be taken into account. This might be illuminating for the purposes of an "outsider," such as a sociological behaviorist or perhaps even a legal advisor alerting her "bad man" client to the risks of adverse legal consequences. But it produces bizarre results when used in an attempt to understand basic legal concepts, such as the notion of property, that in fact reflect the perspective of "insiders," that is, persons who try to shape the law to achieve various purposes and those citizens who willingly conform their conduct to the law's requirements. The resulting distortion is demonstrated by an analysis of Calabresi and Melamed's famous article, "Property Rules, Liability Rules, and Inalienability: One View of the Cathedral." It is shown that, once one attends to the insider's perspective, the categories of property, liability, and inalienability must be understood as categories of directives addressed to law-abiding citizens, rather than as categories of remedies or enforcement mechanisms, as the now conventional view would have it. Recognizing this allows one to open up the discussion of what form of enforcement is appropriate as to any particular rule instantiating any particular category. In particular, it allows one to distinguish between a liability rule, on the one hand, and a property rule that is protected only by a compensatory damages remedy. Conventional law and economics cannot perceive such distinctions and thus has a distorted "view of the cathedral." In the end, the culprit responsible for this distortion is not economics, but the Holmesian "bad man" jurisprudence within which economics has often been applied. Relegating the latter to particular contexts of demonstrated relevance stands to improve our thinking about the relationship between law and economics.

Monitoring environmental standards : do local conditions matter?

Abstract: Economists have criticized regulations that impose uniform environmental standards on plants that may face different marginal abatement costs and damage functions. Such critics ignore the difference in standard implementation across plants, giving rise to nonuniform standards. The authors analyze what determines the regulators' monitoring activities and what factors explain their decision to inspect a plant's environmental performance. They find that regulators are sensitive to local environmental damages and allocate inspection efforts to plants whose emissions are likely to generate more damage. Although national standards are uniform, implementation is a function of local conditions. Local monitoring and enforcement of national standards effectively determines the local price of pollution. Ignoring the tradeoffs taking place locally could undermine and render ineffective national regulatory and policy reform. This supports the public interest theory of regulation, which views the regulator as an agent whose objective is to maximize social welfare. The authors also show that the regulator's behavior is a function of variables not directly related to abatement cost and damages. In particular, conditions in the local labor market affect the regulator's monitoring strategy choice. This lends support to the economic theory of regulation, which views regulators as agents whose behavior can best be explained by assuming that they seek to maximize their political support.

Famous and well-known marks : an international analysis

Abstract: "Chapter I. International recognition and protection of famous and well-known marks. Supranational law and national law. The criteria: when is a mark famous or well-known? Parameters of famous and well-known marks. Protection of famous and well-known marks and the element of bad faith. Protection of famous and well-known marks on non-competing goods. Damages. Enforcement: protection of famous and well-known marks through customs. Protection of famous and well-known trade names. Protection of famous and well-known geographical indications.Chapter II. International legislative history, within the framework of WIPO, of the recognition and protection of famous and well-known marks - Dr Ludwig Baeumer. Chapter III. Recognition and protection of famous and well-known marks by jurisdiction."

Contract Damages, Ruxley, and the Performance Interest

Abstract: The story is told of F.E. Smith, the future Lord Birkenhead L.C., that he and a friend were once walking along a narrow residential street when they came upon a couple of men arguing with each other from the upper floors of houses on opposite sides of the street. “They will never agree”, Smith is supposed to have said, “they're arguing from different premises!”

The Action for Damages in Community Law

Abstract: Examining EC provisions for dealing effectively with the need to compensate individuals for wrongful acts, this volume covers topics ranging from non-contractual liability of the Community for different kinds of legal act, to questions of damages and the Community's contractual liability.

Integrating Punishment and Efficiency Concerns in Punitive Damages for Reckless Disregard of Risks to Others

Abstract: Justifications for the use of punitive damages refer to deterrence and punishment. After formulating a social welfare function that incorporates both economic efficiency and a desire for retribution, optimal punitive damages are considered to balance concerns for economic efficiency and for retribution. This optimal balancing is considered where compensatory damages alone provide the correct level of deterrence, allowing the ideal retribution to vary with the level of wealth and with the level of precaution. The analysis is extended to situations where some accidents do not result in liability.

A Comparative Study of Good Faith, Fair Dealing, and Precontractual Liability

Abstract: The Article begins by defining the duty of good faith under French and American law and discussing the interplay between the underlying contract and tort theories. The second part of the Article will focus on the point at which the duty may arise in the course of negotiations. Third, the measure of damages under both schemes will be discussed. Finally, the differences will be examined in light of the good faith requirement delineated in the Vienna Sales Convention, article 7,5 and as expanded upon in Unidroit principles articles 1.7 and 2.15.6 The comparison of French and American approaches to the existence and nature of a precontractual duty of good faith shows that efforts to harmonize the two approaches are likely to be successful once attorneys become familiar with the scope and nature of such a duty. The Article will conclude with some recommendations for facilitating the development of law in both jurisdictions.

External Costs of Fossil Fuel Cycles

Abstract: The use of energy causes damage to a wide range of receptors, including human health, natural ecosystems, and the built environment. Such damages are referred to as external costs, as they are not reflected in the market price of energy. Traditional economic assessment has ignored externalities, and policy makers have tended to opt for “command and control” legislation for environmental issues. However, there is a growing interest in adopting a more sophisticated approach involving the quantification of the environmental and health impacts of energy use and their related external costs. This requires policy analysts to take account of environmental aspects in their decision making and to undertake a specified cost-benefit analysis.