Firm liability when third parties and consumers incur cumulative harm

Tim Friehe, Eric Langlais, Elisabeth Schulte

This paper analyzes liability rules when consumers and third parties/the environment incur harm. Expected harm is convex in the level of output and modeled as a power function. We show that the social ranking of liability rules previously established for the case in which only consumers suffer harm (strict liability dominates no liability and negligence) may be reversed if harm to third parties or the environment is sufficiently important.

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Year of publication:	February 1, 2021
Authors:	Friehe, Tim ; Langlais, Eric ; Schulte, Elisabeth
Published in:	Jahrestagung 2021 ; 39
Publisher:	[Köln] : Verein für Socialpolitik
Subject:	Liability \| Cumulative harm \| Environmental harm \| Umweltbelastung \| Pollution \| Haftung \| Theorie \| Theory \| Umwelthaftung \| Environmental liability \| Konsumentenverhalten \| Consumer behaviour