The joint use of regulation and strict liability with multidimensional care and uncertain conviction

Bhole, Bharat; Wagner, Jeffrey

doi:10.1016/j.irle.2008.02.008

Cited by 24 publications

(12 citation statements)

References 18 publications

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“…Greater accuracy increases both the likelihood that the guilty are sanctioned and the likelihood that the truly innocent will not be sanctioned. 13 Bhole (2007) and Bhole and Wagner (2008) discuss different ways to induce a given care level through due care standards and penalty multipliers when courts can make errors. Bisso and Choi (2008) observe that a deep pocket principal is often held liable and responsible for harm caused by a judgment proof agent"s negligence (vicarious liability)…”

Section: Liability Sharing and Court Errorsmentioning

confidence: 99%

“…Limited observability of care is equivalent to having both observable and unobservable care Bhole and Wagner (2008). consider multidimensional care, as doHutchinson and Van"t Veld (2005).Dari-Mattiaci and De Geest (2005) and De Geest and Dari-Mattiaci (2007) consider both probability reducing care (self protection) and loss reducing care (self insurance) in the presence of judgment proofness.…”

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confidence: 99%

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The impact of court errors on liability sharing and safety regulation for environmental/industrial accidents

Boyer

Porrini

2011

International Review of Law and Economics

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Section: Liability Sharing and Court Errorsmentioning

confidence: 99%

mentioning

confidence: 99%

The impact of court errors on liability sharing and safety regulation for environmental/industrial accidents

Boyer

Porrini

2011

International Review of Law and Economics

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“…In their framework, accuracy is always desirable but reducing errors requires more enforcement resources and so a cost benefit analysis is needed to find the optimality. Bhole (2007) and Bhole and Wagner (2008) discuss different ways to induce a given care level through due-care standards and penalty multipliers when courts can err in finding firms guilty or not of improper behaviour.…”

Section: Liability Sharing Court Errors and The Choice Of Environmementioning

confidence: 99%

Optimal Liability Sharing and Court Errors: An Exploratory Analysis

Boyer

Porrini

2009

SSRN Journal

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Abstract:We focus in this paper on the effects of court errors on the optimal sharing of liability between firms and financiers, as an environmental policy instrument. Using a structural model of the interactions between firms, financial institutions, governments and courts we show, through numerical simulations, the distortions in liability sharing between firms and financiers that the imperfect implementation of government policies implies. We consider in particular the role played by the efficiency of the courts in avoiding Type I (finding an innocent firm guilty of inappropriate care) and Type II (finding a guilty firm innocent of inappropriate care) errors. This role is considered in a context where liability sharing is already distorted (when compared with first best values) due not only to the courts' own imperfect assessment of safety care levels exerted by firm but also to the presence of moral hazard and adverse selection in financial contracting, as well as of noncongruence of objectives between firms and financiers on the one hand and social welfare maximization on the other. Our results indicate that an increase in the efficiency of the court system in avoiding errors raises safety care levels, thereby reducing the probability of accident, and allowing the social welfare maximizing government to impose a lower liability [higher] share for firms [financiers] as well as a lower standard level of care.

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“…For this result to hold, it is assumed that judges know the average probability of suit characterizing the universe of injurers, but they cannot assess the probability that each injurer has of being sued (not even ex-post). Last, Bhole and Wagner (2008) prove that regulation and liability might be complementary when some precautions are not observable. As noted by the authors, their findings are only valid in presence of market power and when firms' expected liability costs are relevant for social welfare.…”

Section: Introductionmentioning

confidence: 97%

Joint Use of Liability and Regulation in Environmental Law

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in EconStor may INSTITUTE OF LAW AND ECONOMICS WORKING PAPER SERIES Joint Use of Liability and Regulation in Environmental LawStephan Michel Alessandro Romano Ugo Zannini Working Paper 2017 No. 5 NOTE: ILE working papers are circulated for discussion and comment purposes. They have not been peer-reviewed.© 2017 by the authors. All rights reserved. April 2017 Joint Use of Liability and Regulation in Environmental LawStephan Michel , Alessandro Romano , Ugo Zannini * April 11, 2017 AbstractIn this paper, we argue that the joint use of ex-ante regulation and ex-post liability rules is efficient when there are uncertainty surrounding causal investigations and regulatory myopia. As these conditions are generally met in environmental cases, we provide an explanation for the frequent coexistence of these two instruments to control activities that create a risk for the environment. Moreover, we suggest that a joint use of liability and regulation should more frequently be optimal at the European (Federal) level than at the Country (State) level.

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The joint use of regulation and strict liability with multidimensional care and uncertain conviction

Cited by 24 publications

References 18 publications

The impact of court errors on liability sharing and safety regulation for environmental/industrial accidents

The impact of court errors on liability sharing and safety regulation for environmental/industrial accidents

Optimal Liability Sharing and Court Errors: An Exploratory Analysis

Joint Use of Liability and Regulation in Environmental Law

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