This paper analyzes both R&D in pollution control technology and pollution abatement by firms that are subject to environmental liability law (either strict liability or negligence) and are granted R&D subsidies. Firms differ in their R&D costs (private information) and experience technology...

This paper analyzes the output, abatement, and investment decisions made by a monopolistic polluter under environmental liability law. The model applied considers both integrated and end-of-pipe abatement technologies. We find that in the case of fixed technology, in many instances negligence...