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Hazardous-industry Restructuring to Avoid Liability for Accidents
| Content Provider | Semantic Scholar |
|---|---|
| Author | Veld, Klaas Van't |
| Copyright Year | 2000 |
| Abstract | Motivated by statistical and anecdotal evidence of hazardous-industry restructuring to avoid liability, this paper analyzes the implications of imposing liability when not just accident rates but also rm size and wealth are endogenous. It is shown that imposing liability may well introduce a non-convexity in rm costs. As a result, even small, continuous changes in those costs can lead to large, discrete jumps in the equilibrium rm size. More generally, given the typical absence of data on accident prevention costs and liability-claims distributions, the regulator cannot predict ex ante how the equilibrium rm size and accident rates of the industry are likely to change when liability is imposed. Even when these induced changes are observed ex post, the regulator will not be able to determine their welfare implications. The same indeterminacy applies to the comparison of preand post-liability welfare if imposing liability induces smallrm entry. If it induces largerm entry, the overall welfare e ect is unambiguously positive, but may be enhanced if the largerm entry can somehow be prevented. JEL: G33, K13, K32, L11, Q28 |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.econ.lsa.umich.edu/wpweb/2000-10.pdf |
| Language | English |
| Access Restriction | Open |
| Subject Keyword | Accident Prevention Childhood Absence Epilepsy Ectomesenchymal Chondromyxoid Tumor Endogeneity (econometrics) Kind of quantity - Equilibrium Nondeterministic algorithm |
| Content Type | Text |
| Resource Type | Article |
