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Strict liability, scarce generic input and duopoly competition

Author

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  • Gérard Mondello

    (Université Côte D’Azur, GREDEG, UMR 7321, CNRS)

Abstract

Strict liability imposed on firms involved in an imperfect competition game (here duopoly) is not an obstacle to achieving a socially optimal care level of care. However, when one input becomes scarce (here a limited generic asset), the precedent result is compromised. Duopolistic competition leads to supply more goods at a lower price at the equilibrium, but also a lower care level compared to a monopoly placed in similar conditions. When damage are too high, capped strict liability coupled with an ex-ante regulation leads the firms to increase their care level. The weakest one may disappear letting the other one in monopoly situation.

Suggested Citation

  • Gérard Mondello, 2022. "Strict liability, scarce generic input and duopoly competition," European Journal of Law and Economics, Springer, vol. 54(3), pages 369-404, December.
    • Handle: RePEc:kap:ejlwec:v:54:y:2022:i:3:d:10.1007_s10657-022-09738-5
    DOI: 10.1007/s10657-022-09738-5
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    More about this item

    Keywords

    Tort law; Strict liability; Ex-ante regulation; Capped strict liability; Imperfect competition; Oligopoly; Cournot competition;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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