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Environmental Regulations Under Simple Negligence or Strict Liability

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  • Henry van Egteren

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  • R. Smith

Abstract

We use negligence and strict liability as the basis for environmentalregulations and show that, when jurisdictions compete for firms that engagein environmentally risky behaviour, strict liability implements the sociallyoptimal outcome while simple negligence does not, even if the jurisdictionsfully cooperate in setting standards of care. Consequently, we argue that,even if jurisdictions delegate standard setting to a central authority, likein the European Union, this would not implement the socially optimaloutcome. We also demonstrate that harmonization of environmental regulationsmakes more sense if strict liability is used rather than simple negligence. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Henry van Egteren & R. Smith, 2002. "Environmental Regulations Under Simple Negligence or Strict Liability," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(4), pages 367-394, April.
  • Handle: RePEc:kap:enreec:v:21:y:2002:i:4:p:367-394
    DOI: 10.1023/A:1015144713068
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    References listed on IDEAS

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    1. Steven Shavell, 2003. "Economic Analysis of Accident Law," NBER Working Papers 9694, National Bureau of Economic Research, Inc.
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    5. William D. Nordhaus, 1994. "Locational Competition and the Environment: Should Countries Harmonize Their Environmental Policies?," Cowles Foundation Discussion Papers 1079, Cowles Foundation for Research in Economics, Yale University.
    6. Hoel, Michael, 1997. " Environmental Policy with Endogenous Plant Locations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 241-259, June.
    7. Wellisch Dietmar, 1995. "Locational Choices of Firms and Decentralized Environmental Policy with Various Instruments," Journal of Urban Economics, Elsevier, vol. 37(3), pages 290-310, May.
    8. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
    9. Kahan, Marcel, 1989. "Causation and Incentives to Take Care under the Negligence Rule," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 427-447, June.
    10. Rauscher, Michael, 1994. "On Ecological Dumping," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 822-840, Supplemen.
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    Cited by:

    1. van 't Veld, Klaas & Shogren, Jason F., 2012. "Environmental federalism and environmental liability," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 105-119.
    2. Calcott, Paul & Hutton, Stephen, 2006. "The choice of a liability regime when there is a regulatory gatekeeper," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 153-164, March.

    More about this item

    Keywords

    authority; liability; negligence; risky behaviour;

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