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Incentives to Settle Under Joint and Several Liability: An Empirical Analysis of Superfund Litigation

Posted: 22 Sep 1999  

Howard F. Chang

University of Pennsylvania Law School

Hilary Sigman

Rutgers University - Department of Economics; National Bureau of Economic Research (NBER)

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Abstract

Congress may soon restrict joint and several liability for cleanup of contaminated sites under Superfund. We explore whether this change would discourage settlements and is therefore likely to increase the program?s already high litigation costs. Recent theoretical research by Kornhauser and Revesz finds that joint and several liability may either encourage or discourage settlement, depending upon the correlation of outcomes at trial across defendants. We extend their two-defendant model to a richer framework with N defendants. This extension allows us to test the theoretical model empirically using data on Superfund litigation. We find that joint and several liability does not discourage settlements and may even encourage them. Our results support the model?s predictions about the effects of several variables, such as the degree of correlation in trial outcomes.

Suggested Citation

Chang, Howard F. and Sigman, Hilary, Incentives to Settle Under Joint and Several Liability: An Empirical Analysis of Superfund Litigation. Journal of Legal Studies, Vol. 29, No. 205, January 2000. Available at SSRN: https://ssrn.com/abstract=181828

Howard F. Chang (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-573-8296 (Phone)
215-573-2025 (Fax)

Hilary A. Sigman

Rutgers University - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

HOME PAGE: http://econweb.rutgers.edu/sigman

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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