Industry Self-Regulation, Subversion of Public Institutions and Social Control of Torts

Posted: 17 Nov 2009

See all articles by Peter Grajzl

Peter Grajzl

Washington and Lee University - Department of Economics; CESifo

Andrzej Baniak

Central European University (CEU) - Department of Economics

Date Written: November 17, 2009

Abstract

We characterize the comparative efficiency of industry self-regulation as means of social control of torts. Unlike liability, which is imposed by courts ex post, industry self-regulation, much like government regulation, acts before the harm is done. As compared to government regulators, however, the industry regulates with superior information. Furthermore, a pro-industry bias inherent to self-regulation also arises under alternative institutional arrangements when adjudicators are vulnerable to pressure by industry members. We show when industry self-regulation is socially desirable and feasible, and clarify when it could be an attractive institutional arrangement for developing and transition countries.

Keywords: Industry self-regulation, social control of torts, institutional subversion, strict liability, government regulation, industry hazardness

JEL Classification: K13, K23, K42, L50, P50

Suggested Citation

Grajzl, Peter and Baniak, Andrzej, Industry Self-Regulation, Subversion of Public Institutions and Social Control of Torts (November 17, 2009). International Review of Law and Economics, Vol. 29, No. 4, pp. 360-374, 2009. Available at SSRN: https://ssrn.com/abstract=1507884

Peter Grajzl (Contact Author)

Washington and Lee University - Department of Economics ( email )

Lexington, VA 24450
United States

HOME PAGE: http://home.wlu.edu/~grajzlp/

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Andrzej Baniak

Central European University (CEU) - Department of Economics ( email )

Nador u. 9.
Budapest H-1051
Hungary
(36) 1 327-3231 (Phone)
(36) 1 327-3232 (Fax)

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