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Do Exposure Suits Produce a 'Race to File'? An Economic Analysis of a Tort for Risk

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  • Thomas J. Miceli

    (University of Connecticut)

  • Kathleen Segerson

    (University of Connecticut)

Abstract

Conventional tort law does not allow victims of exposure to a toxic substance to seek compensation until they develop actual symptoms of illness. This may effectively bar recovery because at the time the illness arises, injurers may be judgment proof. One possible response is to allow a tort for risk that allows victims to seek expected damages at the time of exposure. However, critics charge that this could create a 'race to file' wherein victims rush to file suit to ensure that they will get a share of the injurer's limited assets. We show that such a race may or may not occur in equilibrium, and that when it does occur, not all victims choose to file at exposure if bankruptcy is an inevitable result. If bankruptcy is not inevitable, it is possible that a tort for risk will trigger bankruptcy, although a no-bankruptcy equilibrium always exists and Paretodominates the bankruptcy equilibrium. We examine the consequences of the various tort-for-risk equilibria on the compensation of exposure victims, litigation costs, and injurer care.

Suggested Citation

  • Thomas J. Miceli & Kathleen Segerson, 2001. "Do Exposure Suits Produce a 'Race to File'? An Economic Analysis of a Tort for Risk," Working papers 2002-42, University of Connecticut, Department of Economics, revised Jun 2004.
    • Handle: RePEc:uct:uconnp:2002-42
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    References listed on IDEAS

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    1. T. Randolph Beard, 1990. "Bankruptcy and Care Choice," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 626-634, Winter.
    2. Thomas J. Miceli & Kathleen Segerson, 2004. "A Tort for Risk and Endogenous Bankruptcy," Working papers 2004-24, University of Connecticut, Department of Economics.
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    Cited by:

    1. Michelle J. White, 2006. "Asbestos Litigation: Procedural Innovations and Forum Shopping," The Journal of Legal Studies, University of Chicago Press, vol. 35(2), pages 365-398, June.

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    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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