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On the joint use of licensing and liability

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  • Lenntorp, Erik

Abstract

Licensing is a widely used technique applied to impose regulations. Firms inducing harm must hold a license issued by a regulatory agency on a case-by-case basis. A firm may also be subject to liability. This paper studies the implications on social welfare of combining licensing with strict liability. Contributions include the study of a joint use and related administrative costs. The latter include costs pertaining to litigation and the issuing and enforcing of licenses. It is established when a joint use is motivated. Regulatory compliance should protect from liability in order to decrease litigation and enforcement costs and associated distortions.

Suggested Citation

  • Lenntorp, Erik, 2009. "On the joint use of licensing and liability," International Review of Law and Economics, Elsevier, vol. 29(3), pages 244-251, September.
    • Handle: RePEc:eee:irlaec:v:29:y:2009:i:3:p:244-251
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    References listed on IDEAS

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    Cited by:

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    2. Andrzej Baniak & Peter Grajzl, 2014. "Controlling Product Risks when Consumers are Heterogeneously Overconfident: Producer Liability vs. Minimum Quality Standard Regulation," CESifo Working Paper Series 5003, CESifo.

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