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This article examines a model of strict liability with costly litigation and presents conditions under which (1) potential injurers take optimal precautions, (2) increasing the cost of litigation enhances precaution and social welfare, (3) the optimal level of liability exceeds the compensatory...
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One of the principal results in the economic theory of liability is that, assuming litigation is costless, the rule of …
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One of the principal results in the economic theory of liability is that, assuming litigation is costless, the rule of …
Persistent link: https://www.econbiz.de/10013309589
externalities. In our model, firms choose activity levels in addition to precautions. In contrast to the usual analysis, we assume … that social returns to activity are higher than private returns before taking harmful externalities into account. We also …
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