This paper is a contribution to the literature on efficient assignment of liabilities for accidental losses arising out of two party interactions involving negative externalities. The objective is to examine the requirements that efficiency imposes on rules for the assignment of liabilities for...

This paper introduces a new mechanism through which positive externality spills over in a network. We find that the introduction of the new spillover mechanism plays a major role in reducing the set of Nash equilibrium though at the same time it increases the set of stable equilibria in a...