The German Environmental Liability Law (ELL) of 1991 has introduced far-reaching civil liability for environmental damages with the aim to increase firms? efforts to prevent accidents. Previous studies find poor evidence that this goal has actually been achieved. One and a half decades after the...

Production often causes pollution as a by-product. Once pollution problems become too severe, regulation is introduced by political authorities which forces the economy to make a transition to cleaner production processes. We model this transition as a change in general purpose technology (GPT)...