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Comparative Causation and Economic Efficiency: When Activity Levels are Constant

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  • Singh Ram

    (Delhi School of Economics and Department of Economics, Harvard University)

Abstract

In some recent works, negligence-based liability has been severely criticized. It has been argued that negligence-based liability does not form a convincing basis for liability assignment. Causation-based liability has been proposed as an alternative basis of liability determination. Parisi and Fon (2004) have studied the efficiency properties of the causal apportionment of liability. The authors have shown that when care levels as well as activity levels of the parties affect the causation of an accident, causation based liability does not provide efficient incentives for the parties. In this paper, we assume the activity levels to be constant. Under this assumption, we have demonstrated the existence of liability rules that are efficient and at the same time `consistent' with the requirement of causation liability. In addition, it is shown that under these rules the equilibrium outcome is unique. The analysis has been undertaken in a very general framework.

Suggested Citation

  • Singh Ram, 2007. "Comparative Causation and Economic Efficiency: When Activity Levels are Constant," Review of Law & Economics, De Gruyter, vol. 3(2), pages 383-406, December.
  • Handle: RePEc:bpj:rlecon:v:3:y:2007:i:2:n:8
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    References listed on IDEAS

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    1. Ehrlich, Isaac, 1975. "The Deterrent Effect of Capital Punishment: A Question of Life and Death," American Economic Review, American Economic Association, vol. 65(3), pages 397-417, June.
    2. Ehrlich, Isaac, 1977. "The Deterrent Effect of Capital Punishment: Reply," American Economic Review, American Economic Association, vol. 67(3), pages 452-458, June.
    3. Luciano Andreozzi, 2004. "Rewarding Policemen Increases Crime. Another Surprising Result from the Inspection Game," Public Choice, Springer, vol. 121(1), pages 69-82, October.
    4. Brand, Sam & Price, Richard, 2000. "The economic and social costs of crime," MPRA Paper 74968, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Giuseppe Dari-Mattiacci & Bruno Lovat & Francesco Parisi, 2014. "Loss-Sharing between Nonnegligent Parties," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(4), pages 571-598, December.
    2. Parisi Francesco & Singh Ram, 2010. "The Efficiency of Comparative Causation," Review of Law & Economics, De Gruyter, vol. 6(2), pages 219-245, September.
    3. Qi Zhou, 2009. "Economic analysis of the legal standard for deceit in English tort law," European Journal of Law and Economics, Springer, vol. 28(1), pages 83-102, August.
    4. Ram Singh, 2006. "On the Existence and Efficiency of Equilibria under Liability Rules," Working papers 150, Centre for Development Economics, Delhi School of Economics.
    5. FRANCESCO PARISI & Ram Singh, 2009. "Efficiency Of Equilibria Under Comparative Causation," Working papers 179, Centre for Development Economics, Delhi School of Economics.
    6. Jain Satish K. & Kundu Rajendra P., 2015. "Decomposition of Accident Loss and Efficiency of Liability Rules," Review of Law & Economics, De Gruyter, vol. 11(3), pages 453-480, November.

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