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A Positive Theory of Strict Liability

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  • Hylton Keith N

    (Boston University)

Abstract

In spite of its tenure as the prevailing economic theory of strict liability, the proposition that strict liability should be preferred to negligence when it is desirable to reduce injurers' activity levels rather than victims' activity levels raises a few questions. First, when should we prefer to reduce injurers' activity levels rather than victims'? Second, why should we not hold both victim and injurer strictly liable? This paper provides a model that answers these questions more effectively than the prevailing economic model. The model presented here offers specific predictions that are consistent with the detailed law on strict liability and the appearance of strict liability in pockets rather than as an across-the-board default rule. The choice between strict liability and negligence depends on the degree to which there is a reciprocal exchange of risk among actors, and the extent to which benefits, in addition to risks, are externalized.

Suggested Citation

  • Hylton Keith N, 2008. "A Positive Theory of Strict Liability," Review of Law & Economics, De Gruyter, vol. 4(1), pages 153-181, June.
    • Handle: RePEc:bpj:rlecon:v:4:y:2008:i:1:n:9
    DOI: 10.2202/1555-5879.1221
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    References listed on IDEAS

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    1. Aaron S. Edlin & Pinar Karaca-Mandic, 2006. "The Accident Externality from Driving," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 931-955, October.
    2. Hylton, Keith N, 1990. "Costly Litigation and Legal Error under Negligence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 433-452, Fall.
    3. Arlen, Jennifer H, 1992. "Liability for Physical Injury When Injurers as Well as Victims Suffer Losses," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 411-426, April.
    4. Michael Spence, 1977. "Consumer Misperceptions, Product Failure and Producer Liability," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 561-572.
    5. Polinsky, A Mitchell, 1980. "Strict Liability vs. Negligence in a Market Setting," American Economic Review, American Economic Association, vol. 70(2), pages 363-367, May.
    6. Aaron S. Edlin & Pinar Karaca-Mandic, 2007. "Erratum: "The Accident Externality from Driving"," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 704-705, August.
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    Cited by:

    1. Terence Centner, 2010. "New state liability exceptions for agritourism activities and the use of liability releases," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 27(2), pages 189-198, June.

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