IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/18418.html
   My bibliography  Save this paper

A Fundamental Enforcement Cost Advantage of the Negligence Rule over Regulation

Author

Listed:
  • Steven Shavell

Abstract

Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm, whereas compliance with the negligence rule is evaluated only if harm occurs. It is shown in a stylized model that because the use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation. Moreover, this advantage suggests that the examination of behavior under the negligence rule should tend to be more detailed than under regulation (as it is).

Suggested Citation

  • Steven Shavell, 2012. "A Fundamental Enforcement Cost Advantage of the Negligence Rule over Regulation," NBER Working Papers 18418, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18418
    Note: LE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w18418.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Steven Shavell, 2011. "Corrective Taxation versus Liability," American Economic Review, American Economic Association, vol. 101(3), pages 273-276, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yayun Shen & Michael Faure, 0. "Green building in China," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-17.
    2. Florian Baumann & Klaus Heine, 2013. "Innovation, Tort Law, and Competition," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(4), pages 703-719, December.
    3. Andrzej Baniak & Peter Grajzl, 2016. "Controlling Product Risks when Consumers Are Heterogeneously Overconfident: Producer Liability versus Minimum-Quality-Standard Regulation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(2), pages 274-304, June.
    4. Yayun Shen & Michael Faure, 2021. "Green building in China," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 21(2), pages 183-199, June.
    5. Andrzej Baniak & Peter Grajzl, 2014. "Controlling Product Risks when Consumers are Heterogeneously Overconfident: Producer Liability vs. Minimum Quality Standard Regulation," CESifo Working Paper Series 5003, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marion Desquilbet & Sylvaine Poret, 2014. "How do GM/non GM coexistence regulations affect markets and welfare?," European Journal of Law and Economics, Springer, vol. 37(1), pages 51-82, February.
    2. Suurmond, Guido, 2007. "The effects of the enforcement strategy," MPRA Paper 21142, University Library of Munich, Germany.
    3. Friehe, Tim & Langlais, Eric, 2015. "On the political economy of public safety investments," International Review of Law and Economics, Elsevier, vol. 41(C), pages 7-16.
    4. Marion Desquilbet & Sylvaine Poret, 2015. "How do GM / non GM coexistence regulations affect markets and welfare?," Working Papers hal-00956039, HAL.
    5. Alonso, Ricardo & Câmara, Odilon, 2021. "Organizing Data Analytics," CEPR Discussion Papers 16768, C.E.P.R. Discussion Papers.
    6. Gérard Mondello, 2013. "Ambiguous Beliefs on Damages and Civil Liability Theories"," Post-Print halshs-00929948, HAL.
    7. Andrzej Baniak & Peter Grajzl, 2014. "Controlling Product Risks when Consumers are Heterogeneously Overconfident: Producer Liability vs. Minimum Quality Standard Regulation," CESifo Working Paper Series 5003, CESifo.
    8. Gérard Mondello, 2022. "Strict liability, scarce generic input and duopoly competition," European Journal of Law and Economics, Springer, vol. 54(3), pages 369-404, December.
    9. Sébastien Pouliot & Daniel A. Sumner, 2008. "Traceability, Liability, and Incentives for Food Safety and Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 15-27.
    10. Marcel Boyer & Donatella Porrini, 2010. "Optimal liability sharing and court errors: an exploratory analysis," Working Papers hal-00463913, HAL.
    11. Venus, Thomas & Punt, Maarten & Wesseler, Justus, 2015. "Influence of voluntary GMO-free production standards on the reputation and flexibility of agricultural value chains," 2015 Conference, August 9-14, 2015, Milan, Italy 211920, International Association of Agricultural Economists.
    12. Eric Langlais & Maxime Charreire, 2020. "Should environment be a concern for competition policy when firms face environmental liability ?," EconomiX Working Papers 2020-25, University of Paris Nanterre, EconomiX.
    13. Arbatskaya, Maria & Aslam, Maria Vyshnya, 2018. "Liability or labeling? Regulating product risks with costly consumer attention," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 238-252.
    14. Lam, Wing Man Wynne, 2016. "Attack-prevention and damage-control investments in cybersecurity," Information Economics and Policy, Elsevier, vol. 37(C), pages 42-51.
    15. Paul Gordon & Alan Woodfield, 2007. "Ex ante liability rules in New Zealand's health and safety in employment act: A law and economics analysis," New Zealand Economic Papers, Taylor & Francis Journals, vol. 41(1), pages 91-108.
    16. Innes, Robert, 1999. "Optimal liability with stochastic harms, judgement-proof injurers, and asymmetric information1," International Review of Law and Economics, Elsevier, vol. 19(2), pages 181-203, June.
    17. Justus Wesseler & Gijs Kleter & Marthe Meulenbroek & Kai P. Purnhagen, 2023. "EU regulation of genetically modified microorganisms in light of new policy developments: Possible implications for EU bioeconomy investments," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 839-859, June.
    18. Eberl, Jakob & Jus, Darko, 2012. "The year of the cat: Taxing nuclear risk with the help of capital markets," Energy Policy, Elsevier, vol. 51(C), pages 364-373.
    19. Hiriart, Yolande & Martimort, David & Pouyet, Jerome, 2010. "The public management of risk: Separating ex ante and ex post monitors," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1008-1019, December.
    20. Pierre Bentata & Karim Barkat, 2012. "Environmental Liability and Regulation: An Empirical Study of the French Institutional Division of Labour," CAE Working Papers 98, Aix-Marseille Université, CERGAM.

    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L5 - Industrial Organization - - Regulation and Industrial Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:18418. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.