Environmental Liability and Harmonization in the Presence of Transboundary Effects and Hidden Assets
University of Alberta Economics Working Paper No. 2005-01-17
28 Pages Posted: 2 Feb 2005
Date Written: January 17, 2005
Within the context of transboundary disputes, this paper seeks to determine which liability concept, negligence or strict liability, performs better when assets are secure against foreign claims for transboundary damages. Our results indicate that, if assets are hidden from foreign claims, strict liability will not implement the socially optimal outcome, but neither will negligence. However, even though the socially optimal outcome is not always achieved, strict liability weakly dominates negligence. These results suggest that the harmonization of statutes that deal with transboundary pollution should be based on strict liability not negligence.
Keywords: Strict liability, negligence, transboundary pollution, harmonization
JEL Classification: K32
Suggested Citation: Suggested Citation