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Negative Liability

Giuseppe Dari‐Mattiacci

University of Amsterdam - Amsterdam Center for Law & Economics (ACLE); Tinbergen Institute

January 27, 2010

Journal of Legal Studies, Vol. 38, No. 1, pp. 21-60, 2009
George Mason Law & Economics Research Paper No. 03-29

Negative and positive externalities pose symmetrical problems to social welfare. The law internalizes negative externalities by providing general tort liability rules. According to such rules, those who cause harm to others should pay compensation. In theory, in the presence of positive externalities, negative liability should apply: those who produce benefits should be paid a compensatory award by the gainers. Nevertheless, the legal system does not display such general negative liability rules. Rather, it tackles the problem of internalizing positive externalities by implementing a set of different and often indirect solutions. My explanation for this asymmetry in legal remedies rests on three features of a negative liability regime, relating to intent, incentives and evidence. These features explain the scope and design of restitution rules, liability for nonfeasance and other mechanisms for the internalization of positive externalities.

Number of Pages in PDF File: 37

Keywords: liability, positive externality, enrichment, restitution, nonfeasance

JEL Classification: D62, K10, K13

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Date posted: July 16, 2003 ; Last revised: April 7, 2011

Suggested Citation

Dari‐Mattiacci, Giuseppe, Negative Liability (January 27, 2010). Journal of Legal Studies, Vol. 38, No. 1, pp. 21-60, 2009; George Mason Law & Economics Research Paper No. 03-29. Available at SSRN: http://ssrn.com/abstract=422961 or http://dx.doi.org/10.2139/ssrn.422961

Contact Information

Giuseppe Dari-Mattiacci (Contact Author)
University of Amsterdam - Amsterdam Center for Law & Economics (ACLE) ( email )
Plantage Muidergracht 12
Amsterdam, 1018 TV
HOME PAGE: http://gdarimat.acle.nl
Tinbergen Institute
Gustav Mahlerplein 117
Amsterdam, 1082 MS
HOME PAGE: http://scholar.google.com/citations?user=AuUfjxUAAAAJ&hl=en
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