Damages

About: Damages is a research topic. Over the lifetime, 9365 publications have been published within this topic receiving 89750 citations. The topic is also known as: compensation award.

A Note on Private versus Social Incentives to Sue in a Costly Legal System

Abstract: This article presents a game-theoretic model of costly litigation. The model shows that where an injurer can calibrate the level of damages done to other parties, it sacrifices in profits an amount related to the victim's litigation costs by inducing suit. Thus the structure of the legal system implicitly internalizes the costs of litigation. Whether complete internalization occurs depends on such considerations as the information of the parties and the injurer's ability to control damages precisely.

Collateral Damage: The impact of the Russia sanctions on sanctioning countries exports

Abstract: Economic sanctions are a frequent instrument of foreign policy. In a diplomatic conflict, they aim to elicit a change in the policies of foreign governments by damaging their economy. However, sanctions are not costless for the sending economy, where domestic firms involved in business with the target countries might incur collateral damages. This paper evaluates these costs in terms of export losses of the diplomatic crisis that started in 2014 between the Russian Federation and 37 countries, (including the United States, the EU, and Japan) over the Ukrainian conflict. We first gauge the global impact of the sanctions' regime using a structural gravity framework and quantify the trade losses in a general equilibrium counterfactual analysis. We estimate this loss at US\$60.2 billion from 2014 until mid-2015. Interestingly, we find that the bulk of the impact stems from products that are not directly targeted by Russian retaliations (taking the form of an embargo on imports of agricultural products). This result suggests that most of the losses are not attributable to the Russian retaliation but to Western sanctions. We then investigate the underlying mechanism at the firm level using French customs data. Results indicate that neither consumer boycotts nor perceived country risk can account for the decline in exports of products that are not targeted by the Russian embargo. Instead, the disruption of the provision of trade finance services is found to have played an important role.

Benefit estimation goes to court: The case of natural resource damage assessments

Abstract: This article evaluates the feasibility of performing natural resource damage assessments under the current Superfund legislation. Using the analyses developed for two recent cases, it explains the sources of the substantial divergences between plaintiffs' and defendants' estimates of these damages. Three factors explain the differences in damage estimates: (1) the time horizon used and treatment of capitalization effects of past damages; (2) the extent of the market assumed in estimating the effects of a release of hazardous wastes on the demand for the affected natural resource; and (3) the character and availability of substitutes for the resource involved.

Public versus Private Enforcement of International Economic Law: Standing and Remedy

Abstract: This paper develops a theory of the rules regarding standing and remedy in international trade and investment agreements. Regarding investment agreements, the paper argues that a credible government‐to‐firm commitment (or signal) that the capital importer will not engage in expropriation or related practices is required and that a private right of action for money damages is the best way to make such a commitment. In trade agreements, by contrast, importing nations have commitments that are best viewed as government to government rather than government to firm. The parties to trade agreements can enhance their mutual political welfare by declining to enforce commitments that benefit politically inefficacious exporters and can most cheaply do so by reserving to themselves the standing to initiate dispute proceedings—a right to act as a political filter. The paper also suggests why governments may prefer to utilize trade sanctions rather than money damages as the penalty for breach of a trade agree...

Embedded Options and the Case Against Compensation in Contract Law

Abstract: Despite the fact that compensation is the governing principle in contract law remedies, it has tenuous historical, economic and empirical support. A promisor's right to breach and pay damages (which is subject to the compensation principle) is only a subset of a larger family of termination rights that do not purport to compensate the promisee for losses suffered when the promisor walks away from the contemplated exchange. These termination rights can be characterized as embedded options that serve important risk management functions. We show that sellers often sell insurance to their buyers in the form of these embedded options. We explain why compensation is of little relevance to the option price agreed to by the parties, which is a function of the value of the option to the buyer, its cost to the seller and the market in which they transact. We thus propose a novel justification for why penalty liquidated damages may be higher than seller's costs: they are option prices that reflect the value of the options to the buyer. The regulation of liquidated damages is thus tantamount to price regulation, which is outside the realm of contract law. Moreover, in light of the heterogeneity among optimal option prices, we also make the case against having an expectation damages default rule to begin with. In thick markets, we argue for enforcing the parties ex ante risk allocation with market damages. In thin markets, we propose that parties be induced to agree explicitly with respect to all termination rights, including breach damages, by the threat of specific performance of their contemplated exchange or, in the case of consumers, by a default rule that provides them a termination option at no cost.