Advanced Search
MyIDEAS: Login to save this paper or follow this series

Buying the Right to Harm: The Economics of Buyouts

Contents:

Author Info

  • Ehud Guttel

    (Duke Law School)

  • Shmuel Leshem

    ()
    (USC School of Law)

Registered author(s):

    Abstract

    Many injurers now offer to buy out victims' property to reduce harm. This pa- per examines the e¢ ciency of buyouts negotiated in the shadow of regulation and liability rules which require injurers to take e¢ cient precautions. It shows that if the social bene?t from precautions is increasing with victims?expected harm, buyouts reduce social welfare. Because buyouts allow injurers to take fewer precautions, a buyout of one victim produces a negative externality for the remaining victims. The injurer can thus exploit victims through a "divide-and-conquer" strategy: making simultaneous, discriminatory take-it-or-leave-it buyout offers. The injurer's profit from buyouts is greater if o¤ers are sequential. Perhaps most surprisingly, buyouts reduce social welfare and victims' joint profits even if victims make simultaneous or sequential take-it-or-leave-it buyout demands to the injurer.

    Download Info

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Bibliographic Info

    Paper provided by Aix-Marseille Université, CERGAM in its series CAE Working Papers with number 93.

    as in new window
    Length: 37 pages
    Date of creation: May 2011
    Date of revision:
    Handle: RePEc:cgm:wpaper:93

    Contact details of provider:
    Postal: Clos Guiot Puyricard - CS 30063, 13089 Aix en Provence Cedex 2
    Phone: 04 42 28 12 08
    Fax: +33 (0)4 42 28 08 00
    Email:
    Web page: http://www.univ-cae.org
    More information through EDIRC

    Related research

    Keywords: Cost-benefit standards; divide and conquer; harmful externalities;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
    2. Alexander Stremitzer, 2008. "Plaintiffs exploiting Plaintiffs," Bonn Econ Discussion Papers bgse2_2008, University of Bonn, Germany.
    3. James T. Hamilton, 1993. "Politics and Social Costs: Estimating the Impact of Collective Action on Hazardous Waste Facilities," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 101-125, Spring.
    4. Rasmusen, Eric B & Ramseyer, J Mark & Wiley, John S, Jr, 1991. "Naked Exclusion," American Economic Review, American Economic Association, vol. 81(5), pages 1137-45, December.
    5. Brooks, Nancy & Sethi, Rajiv, 1997. "The Distribution of Pollution: Community Characteristics and Exposure to Air Toxics," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 233-250, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Guttel, Ehud & Leshem, Shmuel, 2013. "Bargaining around cost–benefit standards," Journal of Public Economics, Elsevier, vol. 103(C), pages 55-67.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:cgm:wpaper:93. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mathieu Bédard).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.