Liability and Large-Scale, Long-term Hazards
This paper analyzes the application of liability to large-scale, long-term hazards. The key features distinguishing such hazards are the long temporal separation between exposure to a hazard and disease, and the large damages when injuries finally emerge. The large scale of damages creates a strong incentive to avoid liability payments and the long temporal separation creates numerous avenues through which parties can avoid paying possible damage awards. The analysis focuses on the incentive to avoid paying damages by vertically divesting production tasks associated with serious occupations risks. The paper then presents an empirical regression analysis of small-firm entry into the U.S. economy between 1967 and 1980. Copyright 1990 by University of Chicago Press.
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