Strict liability, scarce generic input and duopoly competition

Gerard Mondello

European Journal of Law and Economics, 2022, vol. 54, issue 3, No 2, 369-404

Abstract: Abstract Strict liability imposed on firms involved in an imperfect competition game (here duopoly) is not an obstacle to achieving a socially optimal care level of care. However, when one input becomes scarce (here a limited generic asset), the precedent result is compromised. Duopolistic competition leads to supply more goods at a lower price at the equilibrium, but also a lower care level compared to a monopoly placed in similar conditions. When damage are too high, capped strict liability coupled with an ex-ante regulation leads the firms to increase their care level. The weakest one may disappear letting the other one in monopoly situation.

Keywords: Tort law; Strict liability; Ex-ante regulation; Capped strict liability; Imperfect competition; Oligopoly; Cournot competition (search for similar items in EconPapers)
JEL-codes: D43 K13 L13 L52 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Strict Liability, Scarce Generic Input and Duopoly Competition (2021)
Working Paper: STRICT LIABILITY, SCARCE GENERIC INPUT AND DUOPOLY COMPETITION (2021)
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DOI: 10.1007/s10657-022-09738-5

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