Strict liability versus negligence when the injurer's activity involves positive externalities

Author: Kim, Jeong-Yoo

Source: European Journal of Law and Economics, Volume 22, Number 1, July 2006 , pp. 95-104(10)

Publisher: Springer

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Abstract:

In this paper, I assert that, if the potential injurer's activity involves externalities unrelated to accidents, the strict liability rule minimizing only the social cost associated with accidents does not induce the social optimum. I also demonstrate that if the externalities are positive, the negligence rule can perform better than the strict liability rule by selecting the due care appropriately, whereas it cannot if the externalities are negative. This argument can be applied to the product liability law.

Keywords: Externality; Negligence; Product liability; Strict liability

Document Type: Research article

DOI: http://dx.doi.org/10.1007/s10657-006-8982-6

Affiliations: 1: Email: jyookim@khu.ac.kr

Publication date: 2006-07-01