Prevention, Limited Liability and Market Structure
نویسندگان
چکیده
Under a market setting, we analyse the impact of legal liability on prevention, taking into account the possible limited wealth of ...rms. We show that under strict liability, ...rms may choose ex ante not to be able to fully indemnify victims ex post: whatever the market structure, they may use limited liability strategically by investing in prevention in excess of what is socially optimal. The negligence rule prevents ...rms from overinvestment. For high levels of damages, under both liability rules, ...rms exert an insu¢cient e¤ort of prevention. A welfare analysis establishes that when the judgment proof problem is acute, the optimal public intervention ranges from banning the production to imposing the negligence rule.
منابع مشابه
بررسی رابطۀ میان ساختار بازار و ساختار سرمایه در بورس اوراق بهادار تهران
In recent years, financial economists have increasingly recognized the interaction between market structure and capital structure or financial decisions of the firms. This research analyzes the relationship between market structure (power) and the capital structure (leverage ratio) of listed companies in Tehran Stock Exchange (TSE) based on static and dynamic approach. In this research we s...
متن کاملDescriptive Study on "Market Share Liability" in Iranian Rules of Jurisprudence
The release of some estrogenic drugs in the sixties which produced with several therapeutic goals mostly prevention of abortion followed in similar cancer for the children born from the users. However, such cancers identified as the subsequent use of the drugs, due to a multiplicity of pharmacists and the inability of patients to identify the leading manufacturers, the law cases failed to prove...
متن کاملThe consequences of protecting audit partners’ personal assets from the threat of liability
This study investigates the audit firm’s decision to protect its partners’ personal assets by becoming a limited liability partnership (LLP). We find that the likelihood of an audit firm switching from unlimited to limited liability is increasing in its size and exposure to litigation risk. We find no evidence that audit firms supply lower audit quality, lose market share, or charge lower audit...
متن کاملThe Structure, Conduct, and Regulation of the Property-Liability Insurance Industry
Dissatisfaction with property-liability insurance is widespread and seems to be growing. Insurance availability and affordability have become major issues in election campaigns nationwide, and Congress is threatening to impose new federal regulations. This unusual amount of attention seems to reflect fundamental changes in the nature of insurance and insurance markets. Insurers maintain that th...
متن کاملHierarchical Analysis of Effective Components on Auditors\' Professional Liability Insurance to Develop Ethical Framework
Background: The development of the insurance industry and the accounting system are two important pillars of economic development of any country and the ethical responsibility of auditors requires them to reduce the risk of their activities. The present study has developed a hierarchical analysis of the components affecting the professional liability insurance of auditors in order to develop th...
متن کامل