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Environmental Regulations Under Simple Negligence or Strict Liability

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  • Henry van Egteren
  • R. Smith

Abstract

We use negligence and strict liability as the basis for environmentalregulations and show that, when jurisdictions compete for firms that engagein environmentally risky behaviour, strict liability implements the sociallyoptimal outcome while simple negligence does not, even if the jurisdictionsfully cooperate in setting standards of care. Consequently, we argue that,even if jurisdictions delegate standard setting to a central authority, likein the European Union, this would not implement the socially optimaloutcome. We also demonstrate that harmonization of environmental regulationsmakes more sense if strict liability is used rather than simple negligence. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Henry van Egteren & R. Smith, 2002. "Environmental Regulations Under Simple Negligence or Strict Liability," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(4), pages 367-394, April.
    • Handle: RePEc:kap:enreec:v:21:y:2002:i:4:p:367-394
    DOI: 10.1023/A:1015144713068
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    References listed on IDEAS

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    Cited by:

    1. Tim Friehe & Eric Langlais & Elisabeth Schulte, 2022. "Firm Liability When Third Parties and Consumers Incur Cumulative Harm," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(1), pages 53-71, January.
    2. Eric Langlais & Andreea Cosnita-Langlais, 2022. "Incentives to differentiate under environmental liability laws : Product customization and precautionary effort," EconomiX Working Papers 2022-20, University of Paris Nanterre, EconomiX.
    3. van 't Veld, Klaas & Shogren, Jason F., 2012. "Environmental federalism and environmental liability," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 105-119.
    4. Juan José Ganuza & Fernando Gomez, 2011. "Soft Negligence Standards and the Strategic Choice of Firm Size," The Journal of Legal Studies, University of Chicago Press, vol. 40(2), pages 439-466.
    5. Calcott, Paul & Hutton, Stephen, 2006. "The choice of a liability regime when there is a regulatory gatekeeper," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 153-164, March.

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