Decomposition of accident loss and decoupled liability assignment: A class of negligencerules

Papiya Ghosh () and Rajendra P. Kunda ()
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Papiya Ghosh: Indian Institute of Foreign Trade,New Delhi,India
Rajendra P. Kunda: Jawaharlal Nehru University, New Delhi, India

No 2157, Working Papers from Indian Institute of Foreign Trade

Abstract: This paper is a contribution to the literature on efficient assignment of liabilities for accidental losses arising out of two party interactions involving negative externalities.The objective is to examine the requirements that eciency imposes on rules for the assignment of liabilities for such losses. We study efficiency proper ties of a very general class o frules which (i) decompose the loss into two components (speciied loss and excess loss); (ii)assigns the entire excess loss to the injurer if she is negligent and to the victim otherwise; and assign fixed proportions (not necessarily adding upto 1) of the specified loss to the two parties with the possibility of eventually resulting in an assignment of liabilities which can in principle be decoupled. In contrast to existing results we demonstrate that assignment of the specified loss is also important efficiency and complete decoupling is not inconsistent with efficiency.

Keywords: LiabilityRule; negligence; decompositionofloss; decoupledliability; eciency. (search for similar items in EconPapers)
JEL-codes: K13 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2021
New Economics Papers: this item is included in nep-law
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