Negative and positive externalities pose symmetrical problems to social welfare. The law internalizes negative externalities by providing general tort liability rules. According to such rules, those who cause harm to others should pay compensation. In theory, in the presence of positive...

Sharing rules have a filtering effect on violations: they prevent the most harmful violations and let the least harmful ones occur. We show the conditions under which the filtering effect improves social welfare and argue that this may explain why, in most areas of the law, sharing rules are, in...