Reciprocal and bilateral damages

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Chapter 7 in The Economic Analysis of Civil Law, 2022, pp 225-252 from Edward Elgar Publishing

Abstract: How does the analysis change if one abandons this assumption and assumes that both the injurer and the victim would have an influence on the level of damage? In such a case, the legal system is faced with the complex task of providing incentives to the injurious as well as to the injured party. Coase was the first to formulate the economic aspect of this problem in all clarity. "The traditional approach has tended to obscure the nature of the choice that has to be made. The question is commonly thought of as one in which A inflicts harm on B and what has to be decided is: how should we restrain A? But this is wrong. We are dealing with a problem of a reciprocal nature. To avoid the harm to B would inflict harm on A. The real question that has to be decided is: should A be allowed to harm B or should B be allowed to harm A? The problem is to avoid the more serious harm."

Keywords: Economics and Finance; Law - Academic (search for similar items in EconPapers)
Date: 2022
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