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Accidents Waiting to Happen: Liability Policy and Toxic Pollution Releases

  • Anna Alberini

    (University of Maryland)

  • David Austin

    (Resources for the Future)

Proponents of environmental policies based on liability assert that strict liability imposed on polluters induces firms to handle hazardous wastes properly. We examine unintended pollution releases, relating them to the liability imposed on polluters by state mini-Superfund laws. We find that strict liability reduces the frequency and severity of pollution releases, but that its effects vary with firm size. Smaller firms are associated with more pollution releases in states with strict liability, suggesting that in these states smaller firms may have specialized in riskier production processes. Their number, however, has not necessarily grown in response to the state's liability policy. © 2002 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 84 (2002)
Issue (Month): 4 (November)
Pages: 729-741

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Handle: RePEc:tpr:restat:v:84:y:2002:i:4:p:729-741
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