original papers : Safety regulation and monitor liability
AbstractWe propose a simple liability rule when several agents are jointly responsible for monitoring a risky economic activity or certifying its security. Examples are safety controls for drugs or technical systems, environmental liability, or air safety accidents. The agents have private knowledge of their monitoring or avoidance costs. We adopt a mechanism design approach to ensure optimal monitoring incentives. Our innovation is to focus on information that is available or can be proxied when harm has occurred and when typically regulators and/or courts deliberate over fines and damages. By contrast, earlier proposals require more estimations of hypothetical accident scenarios and their ex ante probabilities. We argue that our rule promises substantial savings in information costs for courts and regulators and excludes likely sources of errors.
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Bibliographic InfoArticle provided by Springer in its journal Review of Economic Design.
Volume (Year): 7 (2002)
Issue (Month): 2 ()
Note: Received: 11 October 2000 / Accepted: 14 September 2001
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Web page: http://link.springer.de/link/service/journals/10058/index.htm
Find related papers by JEL classification:
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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- Joshua Anyangah, 2012. "On information, extended liability and judgment proof firms," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(1), pages 61-84, January.
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