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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
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  13. 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.
  14. 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.
  15. 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.
  16. Tim Friehe, . "Victim Interdependence in the Accident Setting," German Working Papers in Law and Economics 2008-1-1217, Berkeley Electronic Press.
  17. 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.
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  19. Meglena Jeleva & Stephane Rossignol, 2009. "Political decision of risk reduction: the role of trust," Public Choice, Springer, vol. 139(1), pages 83-104, April.
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  23. 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.
  24. 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.
  25. Paul Rubin, 2005. "Public choice and tort reform," Public Choice, Springer, vol. 124(1), pages 223-236, July.
  26. 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.
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