We endogenize location/product specification choices in a spatial Cournot duopoly on the linear market when firms' output entails an accidental harm to the environment. Under a strict liability regime, the equilibrium involves no differentiation if the expected harm is low enough. This outcome...

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...