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Optimal Cleanup and Liability after Environmentally Harmful Discharges

Polinsky, A. Mitchell - 2011

This article studies how liability for environmentally harmful discharges affects the incentives of firms to engage in cleanup and invest in precautions, as well as the incentives of consumers to purchase the goods whose production leads to discharges. Our main conclusion is that making firms...

Persistent link: https://www.econbiz.de/10013124354

Costly Litigation and Optimal Damages

Polinsky, A. Mitchell - 2012

A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the...

Persistent link: https://www.econbiz.de/10013096854

Mandatory Versus Voluntary Disclosure of Product Risks

Polinsky, A. Mitchell - 2007

We analyze a model in which firms are able to acquire information about product risks and may or may not be required to disclose this information. We initially study the effect of disclosure rules assuming that firms are not liable for the harm caused by their products. Although mandatory...

Persistent link: https://www.econbiz.de/10012778097

Deterrence and the Optimal Use of Prison, Parole, and Probation

Polinsky, A. Mitchell - 2017

In this article we derive the mix of criminal sanctions—choosing among prison, parole, and probation—that achieves any target level of deterrence at least cost. We assume that prison has higher disutility and higher cost per unit time than parole and probation and that potential offenders...

Persistent link: https://www.econbiz.de/10012955941

The Economic Theory of Public Enforcement of Law

Polinsky, A. Mitchell; Shavell, Steven - 2021

This article surveys the theory of the public enforcement of law -- the use of public agents (inspectors, tax auditors …, police, prosecutors) to detect and to sanction violators of legal rules. We first present the basic elements of the theory … examine a variety of extensions of the central theory, concerning accidental harms, costs of imposing fines, errors, general …

Persistent link: https://www.econbiz.de/10013216494

The Optimal Use of Fines and Imprisonment

Polinsky, A. Mitchell; Shavell, Steven - 2021

This paper examines the use of fines and imprisonment to deter individuals from engaging in harmful activities. These sanctions are analyzed separately as well as together, first for identical risk-neutral individuals and then for two groups of risk-neutral individuals who differ by wealth. When...

Persistent link: https://www.econbiz.de/10013218978

Pigouvian Taxation with Administrative Costs

Polinsky, A. Mitchell; Shavell, Steven - 2021

This paper examines how the optimal Pigouvian tax should be adjusted to reflect administrative costs. Several cases are examined, depending on whether the administrative costs are fixed per firm taxed or are a function of the amount of tax collected, and on whether such costs are borne by the...

Persistent link: https://www.econbiz.de/10013219720

Risk Sharing Through Breach of Contract Remedies

Polinsky, A. Mitchell - 2021

This paper examines the sharing of risk under three different remedies for breach of contract. The risk considered arises from the possibility that, after a seller and buyer have entered into an agreement for the exchange of some (not generally available) good, a third party who values the good...

Persistent link: https://www.econbiz.de/10013223596

Decoupling Liability : Optimal Incentives for Care and Litigation

Polinsky, A. Mitchell; Che, Yeon-Koo - 2021

A "decoupled" liability system is one in which the award to the plaintiff differs from the payment by the defendant. The optimal system of decoupling makes the defendant's payment as high as possible. Such a policy allows the award to the plaintiff to be lowered, thereby reducing the plaintiff's...

Persistent link: https://www.econbiz.de/10013224692

Private Versus Public Enforcement of Fines

Polinsky, A. Mitchell - 2021

The present paper analyzes the competitive, monopolistic, and public enforcement of fines allowing for the costs of enforcement to differ by the choice of the enforcer. There are a number of reasons to expect such differences. First, the benefits from coordinating enforcement -- for example,...

Persistent link: https://www.econbiz.de/10013224885