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Negative Liability

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  • Giuseppe Dari-Mattiacci

    (Universiteit van Amsterdam & George Mason University)

Abstract

Negative and positive externalities pose symmetrical problems to social welfare. The law internalizes negative externalities by providing general tort liability rules. According to such rules, those who cause harm to others should pay compensation. In theory, in the presence of positive externalities, negative liability should apply: those who produce benefits should be paid a compensatory award by the gainers. Nevertheless, the legal system does not display such general negative-liability rules. Rather, it tackles the problem of internalizing positive externalities by implementing a set of different and often indirect solutions. My explanation for this asymmetry in legal remedies rests on three features of a negative-liability regime, relating to intent, incentives, and evidence. These features explain the scope and design of restitution rules, liability for nonfeasance, and other mechanisms for the internalization of positive externalities. (c) 2009 by The University of Chicago. All rights reserved..

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Paper provided by American Law & Economics Association in its series American Law & Economics Association Annual Meetings with number 1030.

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Handle: RePEc:bep:alecam:1030

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  1. Goldberg, Victor P, 1994. "Recovery for Economic Loss following the Exxon Valdez Oil Spill," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 1-39, January.
  2. Peter A. Diamond, 1974. "Accident Law and Resource Allocation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 366-405, Autumn.
  3. Giuseppe Dari-Mattiacci, . "Negative Liability," American Law & Economics Association Annual Meetings 1030, American Law & Economics Association.
  4. Bowles, Roger & Faure, Michael & Garoupa, Nuno, 2000. "Economic analysis of the removal of illegal gains," International Review of Law and Economics, Elsevier, vol. 20(4), pages 537-549, December.
  5. A. Mitchell Polinsky & Steven Shavell, 1993. "Should Liability be Based on the Harm to the Victim or the Gain to the Injurer?," NBER Working Papers 4586, National Bureau of Economic Research, Inc.
  6. Mishan, E J, 1971. "The Postwar Literature on Externalities: An Interpretative Essay," Journal of Economic Literature, American Economic Association, vol. 9(1), pages 1-28, March.
  7. 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.
  8. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," NBER Working Papers 3634, National Bureau of Economic Research, Inc.
  9. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
  10. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  11. Donald Wittman, 1984. "Liability for Harm or Restitution for Benefit?," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 57-80, January.
  12. P. A. Diamond, 1973. "Single Activity Accidents," Working papers 113, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. William M. Landes & Richard A. Posner, 1978. "Salvors, Finders, Good Samaritans and Other Rescuers: An Economic Study of Law and Altruism," NBER Working Papers 0227, National Bureau of Economic Research, Inc.
  14. de Geest, Gerrit, 1992. "The provision of public goods in apartment buildings," International Review of Law and Economics, Elsevier, vol. 12(3), pages 299-315, September.
  15. Wittman, Donald, 1985. "Should compensation be based on costs or benefits?," International Review of Law and Economics, Elsevier, vol. 5(2), pages 173-185, December.
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Cited by:
  1. Giuseppe Dari-Mattiacci, . "Negative Liability," American Law & Economics Association Annual Meetings 1030, American Law & Economics Association.

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