We examine how financial penalties for social damages can be structured to mitigate judgment-proof problems. These problems occur when a producer has insufficient wealth to compensate victims for the most serious damages that can arise from his activities. We demonstrate that a policy in which assessed penalties are decoupled from realized damages generally generates greater social surplus than...

Producer Protection Legislation and Termination Damages in the Presence of Contracting Frictions This study models producer protection legislation that would grant growers the right to claim damages (PPLD) if their contracts are prematurely terminated. In the absence of contracting frictions that prevent contractors from redesigning contracts to accommodate exogenous policy changes, PPLD would ...