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Tort law under oligopolistic competition

Author

Listed:
  • Gérard Mondello

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Evens Salies

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract
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.

Suggested Citation

  • Gérard Mondello & Evens Salies, 2016. "Tort law under oligopolistic competition," Working Papers hal-03459225, HAL.
    • Handle: RePEc:hal:wpaper:hal-03459225
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03459225
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    References listed on IDEAS

    as
    1. Mark A. Geistfeld, 2009. "Products Liability," Chapters, in: Michael Faure (ed.), Tort Law and Economics, chapter 11, Edward Elgar Publishing.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cournot competition; Permit system; Strict liability; Current regime; Industry;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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