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Environmental Liability Law and Induced Technical Change: The Role of Spillovers

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Author Info
Alfred Endres
Bianca Rundshagen
Regina Bertram
Abstract

We investigate the incentives of environmental liability law to improve pollution control technology. It is shown that equilibrium choice of abatement technology and of the level of pollution reduction is socially optimal under very restrictive conditions. However, technological spillovers distort the incentives to innovate. The negligence rule turns out to be less sensitive to this problem than strict liability if the due-care standard is set sufficiently close to the second-best level of care.

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Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 164 (2008)
Issue (Month): 2 (June)
Pages: 254-279
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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200806)164:2_254:ellait_2.0.tx_2-7

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Find related papers by JEL classification:
D60 - Microeconomics - - Welfare Economics - - - General
Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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This page was last updated on 2008-10-6.

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