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The reasonable person standard: trading off static and dynamic efficiency

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  • Alfred Endres

    ()

  • Tim Friehe

Abstract

This paper compares the performance of a due care standard which is tailored to individual precaution costs to that of the reasonable person standard. This is done in a framework in which injurers can reduce their precaution costs via investment in progressing care technology. We show that the reasonable person standard may invoke better investment incentives, pointing to a potential trade-off between static and dynamic efficiency. Copyright Springer Science+Business Media, LLC 2014

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File URL: http://hdl.handle.net/10.1007/s10657-011-9283-2
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Bibliographic Info

Article provided by Springer in its journal European Journal of Law and Economics.

Volume (Year): 37 (2014)
Issue (Month): 2 (April)
Pages: 249-267

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Handle: RePEc:kap:ejlwec:v:37:y:2014:i:2:p:249-267

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Web page: http://www.springerlink.com/link.asp?id=100264

Related research

Keywords: Endogenous care technology; Due care standards; Reasonable person; Liability law; K13;

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References

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  1. Gollop, Frank M & Roberts, Mark J, 1983. "Environmental Regulations and Productivity Growth: The Case of Fossil-Fueled Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 654-74, August.
  2. Craswell, Richard & Calfee, John E, 1986. "Deterrence and Uncertain Legal Standards," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 279-303, Fall.
  3. Downing, Paul B. & White, Lawrence J., 1986. "Innovation in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 18-29, March.
  4. Thomas J. Miceli, 2006. "On Negligence Rules and Self-Selection," Working papers 2006-26, University of Connecticut, Department of Economics.
  5. Bhole, Bharat, 2007. "Due-care standards in a market setting with legal error," International Review of Law and Economics, Elsevier, vol. 27(2), pages 154-169.
  6. Nelson, Randy A & Tietenberg, Tom & Donihue, Michael R, 1993. "Differential Environmental Regulation: Effects on Electric Utility Capital Turnover and Emissions," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 368-73, May.
  7. Peter A. Diamond, 1974. "Single Activity Accidents," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 107-164, January.
  8. Feess, Eberhard & Wohlschlegel, Ansgar, 2006. "Liability and information transmission: The advantage of negligence based rules," Economics Letters, Elsevier, vol. 92(1), pages 63-67, July.
  9. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
  10. Endres, Alfred & Bertram, Regina, 2006. "The development of care technology under liability law," International Review of Law and Economics, Elsevier, vol. 26(4), pages 503-518, December.
  11. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
  12. Endres, Alfred & Friehe, Tim, 2011. "Incentives to diffuse advanced abatement technology under environmental liability law," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 30-40, July.
  13. Cooter, Robert D, 2005. "Innovation, Information, and the Poverty of Nations," Berkeley Olin Program in Law & Economics, Working Paper Series qt9sz547bd, Berkeley Olin Program in Law & Economics.
  14. Alfred Endres & Bianca Rundshagen & Regina Bertram, 2008. "Environmental Liability Law and Induced Technical Change: The Role of Spillovers," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(2), pages 254-279, June.
  15. Maloney, Michael T & Brady, Gordon L, 1988. "Capital Turnover and Marketable Pollution Rights," Journal of Law and Economics, University of Chicago Press, vol. 31(1), pages 203-26, April.
  16. Biglaiser, Gary & Horowitz, John K & Quiggin, John, 1995. "Dynamic Pollution Regulation," Journal of Regulatory Economics, Springer, vol. 8(1), pages 33-44, July.
  17. Friehe, Tim, 2009. "Screening accident victims," International Review of Law and Economics, Elsevier, vol. 29(3), pages 272-280, September.
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