A Fundamental Enforcement Cost Advantage of the Negligence Rule Over Regulation

31 Pages Posted: 29 Sep 2012

See all articles by Steven Shavell

Steven Shavell

Harvard Law School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2012

Abstract

Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm, whereas compliance with the negligence rule is evaluated only if harm occurs. It is shown in a stylized model that because the use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation. Moreover, this advantage suggests that the examination of behavior under the negligence rule should tend to be more detailed than under regulation (as it is).

Suggested Citation

Shavell, Steven, A Fundamental Enforcement Cost Advantage of the Negligence Rule Over Regulation (September 2012). NBER Working Paper No. w18418. Available at SSRN: https://ssrn.com/abstract=2154097

Steven Shavell (Contact Author)

Harvard Law School ( email )

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