Using a formal political economy model with incomplete information regarding the accident preventing activities chosen by the firm (moral hazard) under limited liability, we illustrate different conditions under which an environmental protection system based on extending liability to private financiers or to insurers through compulsory full insurance of the firm is welfare superior, inferior or equivalent to a system based on an incentive regulatory scheme subject to capture by the regulatees. We consider explicitly the following factors: the differential cost between low and high levels of environmental protection activities and the associated accident probabilities, the social cost of public funds, the informational rent of the firm, the net profitability of the risky activities, the level of damages if an accident occurs, the bias factor in case of regulatory capture. We characterize in this parameter space the regions where one system dominates the other.
À l aide d un modèle formel d économie politique avec information incomplète concernant les activités de prévention d accident choisies par l entreprise (risque moral) à responsabilité limitée, nous illustrons différentes conditions sous lesquelles un système de protection environnementale reposant sur la responsabilité élargie aux financiers privés et aux assureurs grâce à une assurance complète et obligatoire de la firme est supérieur, inférieur ou équivalent en terme de bien-être social à un système reposant sur un mécanisme de réglementation incitative sujet à la capture par les réglementés. Nous considérons explicitement les facteurs suivants : le coût différentiel entre les niveaux faibles et élevés d activités de protection de l'environnement et les probabilités d'accidents qui leur sont associées, le coût social des fonds publics, la rente informationnelle de l entreprise, la rentabilité nette des activités risquées, le niveau des dommages en cas d accident et le facteur de biais en cas de capture de l agence de réglementation. Nous caractérisons, dans cet espace de paramètres, les régions dans lesquelles un système domine l'autre.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Find related papers by JEL classification: G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law
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.:
Cited by: (explanations, 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.)
Did you know? You can include your works in the database easily by uploading them on the Munich Personal RePEc Archive (MPRA) if you do not have access to an institutional RePEc archive.