Limiting Limited Liability
Economics Bulletin, Vol. 11, No. 1, pp. 1-7, 2006
12 Pages Posted: 29 Sep 2005
Limited liability may result in inefficient accident prevention, because a relevant portion of the expected harm is externalized on victims. This paper shows that under some restrictive conditions further limiting liability by means of a liability cap can improve caretaking.
Keywords: insolvency, judgment proof, liability, bankruptcy, liability cap
JEL Classification: K13, K32, L59
Suggested Citation: Suggested Citation