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Negative Liability

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  • Giuseppe Dari-Mattiacci

Abstract

Negative and positive externalities pose symmetrical problems to social welfare. The law internalizes negative externalities by providing general tort liability rules. According to such rules, those who cause harm to others should pay compensation. In theory, in the presence of positive externalities, negative liability should apply: those who produce benefits should be paid a compensatory award by the gainers. Nevertheless, the legal system does not display such general negative-liability rules. Rather, it tackles the problem of internalizing positive externalities by implementing a set of different and often indirect solutions. My explanation for this asymmetry in legal remedies rests on three features of a negative-liability regime, relating to intent, incentives, and evidence. These features explain the scope and design of restitution rules, liability for nonfeasance, and other mechanisms for the internalization of positive externalities. (c) 2009 by The University of Chicago. All rights reserved.

Suggested Citation

  • Giuseppe Dari-Mattiacci, 2009. "Negative Liability," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 21-59, January.
  • Handle: RePEc:ucp:jlstud:v:38:y:2009:i:1:p:21-59
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    References listed on IDEAS

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    Cited by:

    1. Yun-chien Chang, 2015. "An economic and comparative analysis of specificatio (the accession doctrine)," European Journal of Law and Economics, Springer, vol. 39(2), pages 225-243, April.
    2. Elizabeth Hoffman & Matthew L. Spitzer, 2011. "The Enduring Power of Coase," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 63-76.
    3. Giuseppe Dari-Mattiacci, 2009. "Negative Liability," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 21-59, January.

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