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Tort law under oligopolistic competition



Type:   Working paper
Titre:   Tort law under oligopolistic competition
Auteur(s):   Mondello, Gérard - Groupe de Recherche en Droit, Economie et Gestion (Auteur)
Salies, Evens (1971-...) - Observatoire français des conjonctures économiques (Auteur)
Date de publication:   2016-09
Collection:   Documents de travail du GREDEG  :  2016-29
Mots-clés:   [en] Cournot competition, Permit system, Strict liability, Current regime, Industry
Résumé:   [en] This article extends the unilateral accident standard model to allow for Cournot competition. Assuming risk-neutrality for the regulator and injurers, it analyzes three liability regimes: strict liability, negligence rule, and strict liability with administrative authorization or permits systems. Under competition the equivalence between negligence rule and strict liability no longer holds, and negligence insures a better level of social care. However, enforcing both a permit system and strict liability restores equivalence between liability regimes. Furthermore, whatever the current regime, competition leads to lower the global safety level of industry. Indeed, the stronger firm may benefit from safety rents, which they may use to increase production rather than maintaining a high level of safety.


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