Type
Working paper
Title
Tort law under oligopolistic competition
In
Documents de travail du GREDEG
Author(s)
MONDELLO Gérard - Groupe de Recherche en Droit, Economie et Gestion (Author)
SALIES Evens - Observatoire français des conjonctures économiques (Author)
Collection
Documents de travail du GREDEG : 2016-29
Keywords
Cournot competition, Permit system, Strict liability, Current regime, Industry
Abstract
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.

BIBLIOGRAPHIC QUOTE
EXPORT