Environmental liability, imperfect information, and multidimensional pollution control

Environmental liability , imperfect information and multidimensional pollution control

A well known result in the economics of tort law is that in the case of a unilateral stochastic externality both a negligence rule and strict liability are in general able to achieve socially optimal precaution. It will be shown in this paper that this equivalence result does no longer hold if imperfect information and multidimensional pollution control activities are considered. It will turn o...

Liability issues in pollution control

Auditor Liability Rules under Imperfect Information and Costly Litigation - The Welfare Increasing Effect of Liability Insurance

This paper examines auditor liability rules under imperfect information, costly litigation and risk averse auditors. A negligence rule fails in such a setting, because in equilibrium auditors will deviate with positive probability from any given standard. It is shown that strict liability outperforms negligence with respect to risk allocation, and the probability that a desired level of care is...

Imperfect Auditing, Appeals, and Limited Liability

We examine the e¤ect of an imperfect audit and a subsequent appeals process in a standard adverse selection problem when legal or institutional restrictions impose an upper bound on penalties. We show that the imperfect audit always reduces the agent’s information rent and enhances e¢ ciency despite the limited liability. A subsequent appeals process, which allows the agent to challenge an unfa...

Civil Liability for Environmental Damage

Protecting nature and preserving its health is emphasized by different religions and human mind. Enjoying a healthy environment is a fundamental human right. Any damage to the environment requires compensation of damages incurred, which is within the scope of civil liability. The key question here is what is the nature of civil liability for environmental damage? How does choosing the right nat...