An Activity-Generating Theory of Regulation

Joshua Schwartzstein () and Andrei Shleifer

Scholarly Articles from Harvard University Department of Economics

Abstract: We propose an activity-generating theory of regulation. When courts make errors, tort litigation becomes unpredictable and as such imposes risk on firms, thereby discouraging entry, innovation, and other socially desirable activity. When social returns to activity are higher than private returns, it may pay the society to generate some information ex ante about how risky firms are and to impose safety standards based on that information. In some situations, compliance with such standards should entirely preempt tort liability; in others, it should merely reduce penalties. By reducing litigation risk, this type of regulation can raise welfare.

Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published in The Journal of Law and Economics

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/27814564/ActivityGenerating.pdf (application/pdf)

Related works:
Journal Article: An Activity-Generating Theory of Regulation (2013)
Working Paper: An Activity-Generating Theory of Regulation (2009)
Working Paper: An Activity-Generating Theory of Regulation
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:27814564

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().