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On the Political Economy of Public Safety Investments

  • Tim Friehe
  • Eric Langlais

This paper explores the interaction of private precaution and public safety investments when the latter are determined in a political process. We distinguish the scenarios in which the median victim infuences public safety from the one in which the injurer lobbies the public agent, and analyze both negligence and strict liability with a defense of contributory negligence. We establish that the levels of injurer and victim care are always socially optimal for the equilibrium level of public safety. However, the equilibrium level of public safety differs from its first-best level and drastically depends on both the specifi cs of the political process and the liability rule applied. This entails that the level of social costs is critically determined by the choice between liability rules for a given political process.

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File URL: http://economix.fr/pdf/dt/2014/WP_EcoX_2014-08.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2014-8.

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Length: 30 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:drm:wpaper:2014-8
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
Web page: http://economix.fr
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  1. Fredriksson, Per G. & Wollscheid, Jim R., 2008. "The political economy of investment: The case of pollution control technology," European Journal of Political Economy, Elsevier, vol. 24(1), pages 53-72, March.
  2. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  3. Epstein, Richard A, 1988. "The Political Economy of Product Liability Reform," American Economic Review, American Economic Association, vol. 78(2), pages 311-15, May.
  4. Meglena Jeleva & Stephane Rossignol, 2009. "Political decision of risk reduction: the role of trust," Public Choice, Springer, vol. 139(1), pages 83-104, April.
  5. Burrows, Paul, 1999. "Combining regulation and legal liability for the control of external costs," International Review of Law and Economics, Elsevier, vol. 19(2), pages 227-244, June.
  6. Schmitz, Patrick W., 2000. "On the joint use of liability and safety regulation," International Review of Law and Economics, Elsevier, vol. 20(3), pages 371-382, September.
  7. Nussim, Jacob & Tabbach, Avraham D., 2009. "A revised model of unilateral accidents," International Review of Law and Economics, Elsevier, vol. 29(2), pages 169-177, June.
  8. Kim, Jeonghyun & Feldman, Allan M., 2006. "Victim or injurer, small car or SUV: Tort liability rules under role-type uncertainty," International Review of Law and Economics, Elsevier, vol. 26(4), pages 455-477, December.
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  10. Shavell, Steven, 2007. "Liability for Accidents," Handbook of Law and Economics, Elsevier.
  11. Tim Friehe, 2008. "On judgment proofness in the case of bilateral harm," European Journal of Law and Economics, Springer, vol. 26(2), pages 175-185, October.
  12. Innes, Robert, 2004. "Enforcement costs, optimal sanctions, and the choice between ex-post liability and ex-ante regulation," International Review of Law and Economics, Elsevier, vol. 24(1), pages 29-48, March.
  13. 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.
  14. Endres, Alfred, 1992. "Strategic behavior under tort law," International Review of Law and Economics, Elsevier, vol. 12(3), pages 377-380, September.
  15. Kolstad, Charles D & Ulen, Thomas S & Johnson, Gary V, 1990. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements?," American Economic Review, American Economic Association, vol. 80(4), pages 888-901, September.
  16. Steven Shavell, 1984. "A Model of the Optimal Use of Liability and Safety Regulation," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 271-280, Summer.
  17. Tim Friehe & Avraham Tabbach, 2014. "Judgment Proofness and the Choice between Monetary and Nonmonetary Care," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(2), pages 249-274, June.
  18. Rubin, Paul H & Curran, Christopher & Curran, John F, 2001. " Litigation versus Legislation: Forum Shopping by Rent Seekers," Public Choice, Springer, vol. 107(3-4), pages 295-310, June.
  19. Rouillon, Sebastien, 2008. "Safety regulation vs. liability with heterogeneous probabilities of suit," International Review of Law and Economics, Elsevier, vol. 28(2), pages 133-139, June.
  20. Friehe, Tim, 2009. "Sequential torts and bilateral harm," International Review of Law and Economics, Elsevier, vol. 29(2), pages 161-168, June.
  21. Winter, Harold, 1994. "Sequential Torts with imperfect information," International Review of Law and Economics, Elsevier, vol. 14(1), pages 35-40, March.
  22. Rubin, Paul H & Bailey, Martin J, 1994. "The Role of Lawyers in Changing the Law," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 807-31, June.
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  24. Zeckhauser, Richard, 2008. "Overreaction to Fearsome Risks," Working Paper Series rwp08-079, Harvard University, John F. Kennedy School of Government.
  25. Shavell, S., 1986. "The judgment proof problem," International Review of Law and Economics, Elsevier, vol. 6(1), pages 45-58, June.
  26. Hiriart, Yolande & Martimort, David & Pouyet, Jerome, 2004. "On the optimal use of ex ante regulation and ex post liability," Economics Letters, Elsevier, vol. 84(2), pages 231-235, August.
  27. Per G. Fredriksson & Xenia Matschke & Jenny Minier, 2008. "Environmental Policy in Majoritarian Systems," Working papers 2008-01, University of Connecticut, Department of Economics, revised Sep 2009.
  28. Friehe Tim, 2007. "On the Similarity of Bilateral Harm and Unilateral Harm with Role-Type Uncertainty," Review of Law & Economics, De Gruyter, vol. 3(2), pages 553-580, December.
  29. Dhammika Dharmapala & Sandra A. Hoffmann, 2002. "Bilateral Accidents with Intrinsically Interdependent Costs of Precaution," Working papers 2002-11, University of Connecticut, Department of Economics.
  30. Endres, Alfred & Bertram, Regina, 2006. "The development of care technology under liability law," International Review of Law and Economics, Elsevier, vol. 26(4), pages 503-518, December.
  31. repec:cup:cbooks:9780521894753 is not listed on IDEAS
  32. Paul Rubin, 2005. "Public choice and tort reform," Public Choice, Springer, vol. 124(1), pages 223-236, July.
  33. Bhole, Bharat & Wagner, Jeffrey, 2008. "The joint use of regulation and strict liability with multidimensional care and uncertain conviction," International Review of Law and Economics, Elsevier, vol. 28(2), pages 123-132, June.
  34. Tim Friehe, . "Victim Interdependence in the Accident Setting," German Working Papers in Law and Economics 2008-1-1217, Berkeley Electronic Press.
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