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No-Fault for Motor Vehicles: An Economic Analysis

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  • Yu-Ping Liao
  • Michelle J. White

Abstract

This article compares incentives and efficiency under the pure tort system (the comparative negligence rule) to those under pure and mixed no-fault systems. Under no-fault systems, drivers are allowed to opt out of no-fault and file lawsuits if their damages exceed a certain threshold. We find that no single liability system always dominates on efficiency grounds, but the pure tort system does best when costs of care are low, and pure no-fault does best when costs of care are high. Choice systems, in which drivers choose between no-fault or pure tort systems, lead to less efficient results because drivers choose the pure tort rule too often. Copyright 2002, Oxford University Press.

Suggested Citation

  • Yu-Ping Liao & Michelle J. White, 2002. "No-Fault for Motor Vehicles: An Economic Analysis," American Law and Economics Review, Oxford University Press, vol. 4(2), pages 258-294.
  • Handle: RePEc:oup:amlawe:v:4:y:2002:i:2:p:258-294
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    Citations

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    Cited by:

    1. Ram Singh, 2005. "Comparative Causation -- A Re-examination," Working papers 139, Centre for Development Economics, Delhi School of Economics.
    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. Allan M. Feldman & Ram Singh, 2009. "Comparative Vigilance," American Law and Economics Review, Oxford University Press, vol. 11(1), pages 134-161.
    4. Feldman Allan M. & Singh Ram, 2011. "A Simple Guide to Comparative Vigilance," Asian Journal of Law and Economics, De Gruyter, vol. 2(3), pages 1-24, October.
    5. Allan M Feldman & Ram Singh, 2008. "Comparative Vigilance: a Simple Guide," Working Papers 2008-11, Brown University, Department of Economics.
    6. Ram Singh, 2006. "On the Existence and Efficiency of Equilibria under Liability Rules," Working papers 150, Centre for Development Economics, Delhi School of Economics.
    7. Allan M. Feldman & Ram Singh, 2009. "Comparative Vigilance," American Law and Economics Review, Oxford University Press, vol. 11(1), pages 134-161.
    8. Mark Harrison, 2013. "Evidence-free Policy: The Case of the National Injury Insurance Scheme," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 20(1), pages 55-70.
    9. Michelle J. White, 2002. "The "Arms Race" on American Roads: The Effect of Heavy Vehicles on Traffic Safety and the Failure of Liability Rules," NBER Working Papers 9302, National Bureau of Economic Research, Inc.
    10. FRANCESCO PARISI & Ram Singh, 2009. "Efficiency Of Equilibria Under Comparative Causation," Working papers 179, Centre for Development Economics, Delhi School of Economics.
    11. Singh, Ram, 2007. "‘Causation-consistent’ liability, economic efficiency and the law of torts," International Review of Law and Economics, Elsevier, vol. 27(2), pages 179-203.
    12. White, Michelle J, 2004. "The "Arms Race" on American Roads: The Effect of Sport Utility Vehicles and Pickup Trucks on Traffic Safety," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 333-355, October.

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