The Failure of Decoupling Liability and Other Mistakes in Tort Law
AbstractIn this paper I want to demonstrate that it is not possible, with traditional liability rules, to have one party that takes an efficient level of precaution. Both parties, whaever is the rule, take an excessive level of precaution. The problem is that, when we try to calculate the costs of an activity, we dconsider also the cost of precaution of the other party, but this is not usually done. Also the introduction of a tax (the solution called as "decoupling liability") does not solve the problem because the party who pays the tax does not consider the cost of precaution of the other party. This way of reasoning is instead wrog in unilateral accident where a party does not take precautions. In this case an efficient level of activity is reached. Due to these considerations some traditional conclusions about tort liabiity should be reconsidered
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 42242.
Date of creation: 2012
Date of revision:
The ineffciency of decoupling liability; the impossibility of a have a party to take an efficient level of precaution; some problems with Shavell Theorem;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-03 (All new papers)
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.:
- 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.
- A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 562-570, Winter.
- Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
- G. Dari Mattiacci & Francesco Parisi, 2003. "The Economics of Tort Law: A PrÃ©cis," Working Papers 03-13, Utrecht School of Economics.
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