The Effect of Joint and Several Liability Under Superfund on Brownfields

Howard F. Chang and Hilary Sigman

No 11667, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In response to claims that the threat of environmental liability under the Superfund law deters the acquisition of potentially contaminated sites (or "brownfields") for redevelopment, the federal government has adopted programs to protect purchasers from liability. This protection may be unwarranted, however, if sellers can simply adjust property prices downward to compensate buyers for this liability. We present a model of joint and several liability under Superfund that allows us to distinguish four different reasons that this liability may discourage the purchase of brownfields. The previous literature has overlooked the effects that we identify, which all arise because a sale may increase the number of defendants in a suit to recover cleanup costs. Our analysis suggests that the brownfields problem may be more widespread than one might infer from the prior literature. Furthermore, the effects that we identify may distort not only the incentives to sell property subject to Superfund liability but also any decision of any party subject to any joint and several liability if that decision could affect the number of other defendants liable for the same harm.

JEL-codes: K32 Q5 R3 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-law
Note: LE PE EEE
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Citations: View citations in EconPapers (2)

Published as Chang, Howard F. & Sigman, Hilary, 2007. "The effect of joint and several liability under superfund on brownfields," International Review of Law and Economics, Elsevier, vol. 27(4), pages 363-384, December.

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Journal Article: The effect of joint and several liability under superfund on brownfields (2007)
Working Paper: The Effect of Joint and Several Liability under Superfund on Brownfields (2005)
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