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Review of Law & Economics

Editor-in-Chief: Parisi, Francesco

Ed. by Cooter, Robert D. / Gómez Pomar, Fernando / Kornhauser, Lewis A. / Parchomovsky, Gideon / Ulen, Thomas

3 Issues per year


SCImago Journal Rank (SJR): 0.320
Source Normalized Impact per Paper (SNIP): 0.510

VolumeIssuePage

Comparative Causation and Economic Efficiency: When Activity Levels are Constant

Ram Singh1

1Delhi School of Economics and Department of Economics, Harvard University

Citation Information: Review of Law & Economics. Volume 3, Issue 2, Pages 383–406, ISSN (Online) 1555-5879, DOI: 10.2202/1555-5879.1107, December 2007

Publication History

Published Online:
2007-12-11

In some recent works, negligence-based liability has been severely criticized. It has been argued that negligence-based liability does not form a convincing basis for liability assignment. Causation-based liability has been proposed as an alternative basis of liability determination. Parisi and Fon (2004) have studied the efficiency properties of the causal apportionment of liability. The authors have shown that when care levels as well as activity levels of the parties affect the causation of an accident, causation based liability does not provide efficient incentives for the parties. In this paper, we assume the activity levels to be constant. Under this assumption, we have demonstrated the existence of liability rules that are efficient and at the same time `consistent' with the requirement of causation liability. In addition, it is shown that under these rules the equilibrium outcome is unique. The analysis has been undertaken in a very general framework.

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