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Firm Liability When Third Parties and Consumers Incur Cumulative Harm

Author

Listed:
  • Tim Friehe

    (University of Marburg)

  • Eric Langlais

    (EconomiX UMR 7235 CNRS and Paris Nanterre)

  • Elisabeth Schulte

    (University of Marburg)

Abstract

This paper analyzes liability rules when consumers and third parties/the environment incur harm. Expected harm is convex in the level of output and modeled as a power function. We show that the social ranking of liability rules previously established for the case in which only consumers suffer harm (Strict Liability dominates No Liability and Negligence) may be reversed if harm to third parties or the environment is sufficiently important.

Suggested Citation

  • 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.
    • Handle: RePEc:kap:enreec:v:81:y:2022:i:1:d:10.1007_s10640-021-00617-2
    DOI: 10.1007/s10640-021-00617-2
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    More about this item

    Keywords

    Liability; Cumulative harm; Environmental harm;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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