Do Exposure Suits Produce a 'Race to File'? An Economic Analysis of a Tort for Risk

University of Connecticut Economics Working Paper

33 Pages Posted: 1 Nov 2001

See all articles by Thomas J. Miceli

Thomas J. Miceli

University of Connecticut - Department of Economics

Kathleen Segerson

University of Connecticut - Department of Economics

Date Written: October 2001

Abstract

Conventional tort law does not allow victims of exposure to a toxic substance to seek compensation until they develop symptoms of illness. This may effectively bar recovery because at the time the illness arises, injurers may be judgment proof. One possible response is to allow a tort for risk that allows victims to seek expected damages at the time of exposure. However, critics charge that this could create a "race to file" wherein victims rush to file to ensure that they will get a share of the injurer's limited assets. We show that such a race may or may not occur in equilibrium, and when it does occur, not all victims choose to file at exposure if bankruptcy is an inevitable result. If bankruptcy is not inevitable, it is possible that a tort for risk will trigger bankruptcy, although a no-bankruptcy equilibrium always exists and Pareto-dominates the bankruptcy equilibrium. We examine the consequences of the various tort-for-risk equilibria on the compensation of victims, litigation costs, and injurer care.

Keywords: Toxic torts, exposure to a toxic substance, bankruptcy, litigation costs

JEL Classification: K13, K32, K41

Suggested Citation

Miceli, Thomas J. and Segerson, Kathleen, Do Exposure Suits Produce a 'Race to File'? An Economic Analysis of a Tort for Risk (October 2001). University of Connecticut Economics Working Paper. Available at SSRN: https://ssrn.com/abstract=288581 or http://dx.doi.org/10.2139/ssrn.288581

Thomas J. Miceli (Contact Author)

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-5810 (Phone)
860-486-4463 (Fax)

Kathleen Segerson

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-4567 (Phone)
860-486-4463 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
114
Abstract Views
786
rank
240,644
PlumX Metrics