Welfare Implications of Costly Litigation Under Strict Liability

37 Pages Posted: 29 Oct 1999

See all articles by Keith N. Hylton

Keith N. Hylton

Boston University - School of Law

Multiple version iconThere are 3 versions of this paper

Date Written: August 30, 1999

Abstract

This paper examines a model of strict liability with costly litigation, and presents the conditions under which: (1) potential injurers take optimal precautions, (2) increasing litigation costs enhance precaution and social welfare, (3) the optimal level of liability exceeds the compensatory level, and (4) increasing the rate of settlement increases social welfare. The results have implications for controversies surrounding optimal damage awards (e.g., punitive versus compensatory), fee shifting, and the desirability of settlement.

Suggested Citation

Hylton, Keith N., Welfare Implications of Costly Litigation Under Strict Liability (August 30, 1999). Boston University School of Law Working Paper No. 99-13. Available at SSRN: https://ssrn.com/abstract=182792 or http://dx.doi.org/10.2139/ssrn.182792

Keith N. Hylton (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
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