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The Failure of Decoupling Liability and Other Mistakes in Tort Law

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  • baffi, enrico

Abstract

In 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 Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42242.

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Date of creation: 2012
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Handle: RePEc:pra:mprapa:42242

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Keywords: The ineffciency of decoupling liability; the impossibility of a have a party to take an efficient level of precaution; some problems with Shavell Theorem;

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  1. 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.
  2. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
  3. G. Dari Mattiacci & Francesco Parisi, 2003. "The Economics of Tort Law: A Précis," Working Papers 03-13, Utrecht School of Economics.
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