IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/42242.html
   My bibliography  Save this paper

The Failure of Decoupling Liability and Other Mistakes in Tort Law

Author

Listed:
  • baffi, enrico

Abstract

In this paper I want to demonstrate that it is not possible, with traditional liability rules, to have one party that takes an efficient level of precaution. Both parties, whaever is the rule, take an excessive level of precaution. The problem is that, when we try to calculate the costs of an activity, we dconsider also the cost of precaution of the other party, but this is not usually done. Also the introduction of a tax (the solution called as "decoupling liability") does not solve the problem because the party who pays the tax does not consider the cost of precaution of the other party. This way of reasoning is instead wrog in unilateral accident where a party does not take precautions. In this case an efficient level of activity is reached. Due to these considerations some traditional conclusions about tort liabiity should be reconsidered

Suggested Citation

  • baffi, enrico, 2012. "The Failure of Decoupling Liability and Other Mistakes in Tort Law," MPRA Paper 42242, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42242
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/42242/1/MPRA_paper_42242.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Guiseppe Dari Mattiaci & F. Parisi, 2003. "The Economics of Tort Law: A Précis," Working Papers 03-13, Utrecht School of Economics.
    2. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 562-570, Winter.
    3. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
    Full references (including those not matched with items on IDEAS)

    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. Allan M Feldman & Ram Singh, 2021. "Equilibria under Liability Rules: How the standard claims fall apart," Working papers 315, Centre for Development Economics, Delhi School of Economics.
    2. Parisi Francesco & Singh Ram, 2010. "The Efficiency of Comparative Causation," Review of Law & Economics, De Gruyter, vol. 6(2), pages 219-245, September.
    3. Giuseppe Dari-Mattiacci, 2009. "Negative Liability," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 21-59, January.
    4. Guiseppe Dari Mattiaci & F. Parisi, 2003. "The Economics of Tort Law: A Précis," Working Papers 03-13, Utrecht School of Economics.
    5. Dari-Mattiacci Giuseppe, 2006. "On the Optimal Scope of Negligence," Review of Law & Economics, De Gruyter, vol. 1(3), pages 331-364, January.
    6. FRANCESCO PARISI & Ram Singh, 2009. "Efficiency Of Equilibria Under Comparative Causation," Working papers 179, Centre for Development Economics, Delhi School of Economics.
    7. Emanuela Carbonara & Alice Guerra & Francesco Parisi, 2016. "Sharing Residual Liability: The Cheapest Cost Avoider Revisited," The Journal of Legal Studies, University of Chicago Press, vol. 45(1), pages 173-201.
    8. Jain Satish K., 2012. "Decoupled Liability and Efficiency: An Impossibility Theorem," Review of Law & Economics, De Gruyter, vol. 8(3), pages 697-718, December.
    9. Sophie Bienenstock, 2019. "The Deterrent Effect of French Liability Law: the Example of Abusive Contract Terms," Post-Print hal-03222207, HAL.
    10. Goerke, Laszlo & Neugart, Michael, 2015. "Lobbying and dismissal dispute resolution systems," International Review of Law and Economics, Elsevier, vol. 41(C), pages 50-62.
    11. Cooter, Robert D., 1997. "Commodifying Liability," Berkeley Olin Program in Law & Economics, Working Paper Series qt9pq4m8ts, Berkeley Olin Program in Law & Economics.
    12. Xinyu Hua & Kathryn E. Spier, 2005. "Information and Externalities in Sequential Litigation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(2), pages 215-232, June.
    13. Jain, Satish K. & Kundu, Rajendra P., 2006. "Characterization of efficient simple liability rules with multiple tortfeasors," International Review of Law and Economics, Elsevier, vol. 26(3), pages 410-427, September.
    14. Jaivir Singh, 2006. "Separation of powers and the erosion of the ‘right to property’ in India," Constitutional Political Economy, Springer, vol. 17(4), pages 303-324, December.
    15. Hoffmann, Sandra & Hanemann, W. Michael, 2005. "Torts and the Protection of "Legally Recognized" Interests," RFF Working Paper Series dp-05-21, Resources for the Future.
    16. Sophie Bienenstock & Claudine Desrieux, 2022. "Abusive contract terms: Is unenforceability a deterrent sanction?," European Journal of Law and Economics, Springer, vol. 54(2), pages 187-216, October.
    17. Ikeda Yasuhiro & Mori Daisuke, 2015. "Can Decoupling Punitive Damages Deter an Injurer’s Harmful Activity?," Review of Law & Economics, De Gruyter, vol. 11(3), pages 513-528, November.
    18. Singh, Ram, 2007. "‘Causation-consistent’ liability, economic efficiency and the law of torts," International Review of Law and Economics, Elsevier, vol. 27(2), pages 179-203.
    19. 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.
    20. Allan M. Feldman & Ram Singh, 2009. "Comparative Vigilance," American Law and Economics Review, American Law and Economics Association, vol. 11(1), pages 134-161.

    More about this item

    Keywords

    The ineffciency of decoupling liability; the impossibility of a have a party to take an efficient level of precaution; some problems with Shavell Theorem;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

    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:pra:mprapa:42242. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.