Optimal Cleanup and Liability After Environmentally Harmful Discharges / A. Mitchell Polinsky, Steven Shavell.

Format:

Book

Author/Creator:

Polinsky, A. Mitchell.

Contributor:

National Bureau of Economic Research.

Shavell, Steven.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4176.

NBER working paper series no. w4176

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Summary:

This article studies how liability for environmentally harmful discharges affects the incentives of firms to engage in cleanup and invest in precautions, as well as the incentives of consumers to purchase the goods whose production leads to discharges. Our main conclusion is that making firms responsible for cleanup and strictly liable for any remaining harm will lead to the socially optimal outcome. We also show that under the negligence approach -- whereby a firm is liable for damages only if it fails to take appropriate precautions or to engage in proper cleanup -- the outcome will not be optimal: too much of the good will be purchased.

Notes:

Print version record

September 1992.