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Social Wealth and Optimal Care

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  • Giuseppe Dari-Mattiacci
  • Eric Langlais

Abstract

Many industrial accidents result in losses (material damages or bodily injury) that cannot be perfectly compensated by a monetary payment, nor be perfectly insured. Moreover, often injurers control ex ante the magnitude rather than the probability of accidents. We study the characteristics of optimal levels of care and distribution of risk under these circumstances. We then examine whether ordinary liability rules, regulation, insurance, taxes and subsidies can be used to implement the first-best outcome. Finally, our results are discuss in the light of fairness considerations (second best view).

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Bibliographic Info

Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2008-34.

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Length: 27 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:drm:wpaper:2008-34

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Keywords: accidents; risk; wealth; care; bodily injury;

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