The Economics of Activity Levels in Tort Liability and Regulation

Research Handbook on Economic Models of Law, Edited by Thomas J. Miceli and Matthew J. Baker, 2014, Forthcoming

Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-15

40 Pages Posted: 15 Sep 2013

See all articles by Nuno Garoupa

Nuno Garoupa

George Mason University - Antonin Scalia Law School, Faculty

Thomas S. Ulen

University of Illinois College of Law

Date Written: September 13, 2013

Abstract

In this paper, we make three central arguments. The first important argument questions the implicit assumption of the activity-level effect literature that there is a monotonically increasing relationship between the probability of an accident’s occurring and the quantity of the underlying risky activity. The second significant observation is that, even if we were to adopt the standard understanding of the activity-level effect, we believe that the negligence standard is perfectly capable of incorporating that effect as a duty with which potential wrongdoers must comply or face liability. The third argument questions whether tort liability is the most appropriate regulatory tool for inducing parties to take socially optimal precaution where there are activity-level effects.

Suggested Citation

Garoupa, Nuno and Ulen, Thomas S., The Economics of Activity Levels in Tort Liability and Regulation (September 13, 2013). Research Handbook on Economic Models of Law, Edited by Thomas J. Miceli and Matthew J. Baker, 2014, Forthcoming; Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-15. Available at SSRN: https://ssrn.com/abstract=2325695

Nuno Garoupa (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Thomas S. Ulen

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States

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