Abstract

http://ssrn.com/abstract=681470
 
 

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Soft Regulators, Tough Judges


Gerrit De Geest


Washington University in Saint Louis - School of Law

Giuseppe Dari-Mattiacci


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


Supreme Court Economic Review, Vol. 15, 2007
George Mason Law & Economics Research Paper No. 05-06

Abstract:     
When tort liability and regulation are jointly applicable, judges have a tendency to be more demanding than regulators. Liability standards are generally more stringent than regulatory ones: violation of a regulatory standard is normally considered negligence per se while compliance with regulation does not automatically relieve the injurer of tort liability. While under an imperfectly working tort liability system - i.e. a tort law system whose prevention function is undermined by judgment proof or disappearing defendants - injurers take too little precaution, it will still often be the case that only major violations (and not minor violations) are rewarding. Mathematically, this will occur when the injurer's expected expenses function exhibits two local minima, one at the socially optimal level of care and the other below that level. Regulation set below the optimal level can make the latter unfeasible, thereby enabling liability to induce socially optimal outcomes.

Number of Pages in PDF File: 23

Keywords: insolvency, judgment proof problem, disappearing defendant, bankruptcy, regulation

JEL Classification: K13, K32

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Date posted: March 8, 2005  

Suggested Citation

De Geest, Gerrit and Dari-Mattiacci, Giuseppe, Soft Regulators, Tough Judges. Supreme Court Economic Review, Vol. 15, 2007; George Mason Law & Economics Research Paper No. 05-06. Available at SSRN: http://ssrn.com/abstract=681470 or http://dx.doi.org/10.2139/ssrn.681470

Contact Information

Gerrit De Geest (Contact Author)
Washington University in Saint Louis - School of Law ( email )
Campus Box 1120
St. Louis, MO 63130
United States
314-398-4941 (Phone)
HOME PAGE: http://www,degeest.wustl..edu
Giuseppe Dari-Mattiacci
University of Amsterdam - Amsterdam Center for Law and Economics (ACLE) ( email )
Roeterstraat 11
Amsterdam, 1018WB
Netherlands
HOME PAGE: http://darimattiacci.acle.nl
Tinbergen Institute
Roetersstraat 31
Amsterdam, 1018 WB
Netherlands
HOME PAGE: http://scholar.google.com/citations?user=AuUfjxUAAAAJ&hl=en
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