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Industry self-regulation, subversion of public institutions, and social control of torts

  • Grajzl, Peter
  • Baniak, Andrzej

We characterize the comparative efficiency of industry self-regulation as means of social control of torts. Unlike liability, which is imposed by courts ex post, industry self-regulation, much like government regulation, acts before the harm is done. As compared to government regulators, however, the industry regulates with superior information. Furthermore, a pro-industry bias inherent to self-regulation also arises under alternative institutional arrangements when adjudicators are vulnerable to pressure by industry members. We show when industry self-regulation is socially desirable and feasible, and clarify when it could be an attractive institutional arrangement for developing and transition countries.

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Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 29 (2009)
Issue (Month): 4 (December)
Pages: 360-374

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Handle: RePEc:eee:irlaec:v:29:y:2009:i:4:p:360-374
Contact details of provider: Web page: http://www.elsevier.com/locate/irle

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