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Causation, Economic Efficiency and the Law of Torts

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  • Ram Singh

    (Delhi School of Economics)

Abstract

In standard models dealing with liability rules, generally, the proportion of accident loss a party is required to bear does not depend upon the 'causation' - the extent to which the care or lack of care on the part of the party contributed to the loss. As a matter of legal doctrine, this specification of the liability rules is said to be incorrect. The efficiency analysis incorporating the causation requirement of law of Torts, whenever undertaken, is largely restricted only to the rule of negligence. One of the aims of this paper is to provide an efficiency characterization of the entire class of liability rules when the `causation' requirement of the law is taken into account. We demonstrate that the contradiction between causation doctrine of the law, on the one hand, and economic efficiency, on the other, is not as wide and intense as it is believed to be.

Suggested Citation

  • Ram Singh, 2002. "Causation, Economic Efficiency and the Law of Torts," Working papers 102, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:102
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    References listed on IDEAS

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    1. Cooter, Robert, 1998. "Expressive Law and Economics," The Journal of Legal Studies, University of Chicago Press, vol. 27(2), pages 585-608, June.
    2. Peter A. Diamond, 1974. "Single Activity Accidents," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 107-164, January.
    3. A. Mitchell Polinsky, 1980. "Strict Liability versus Negligence in a Market Setting," NBER Working Papers 0420, National Bureau of Economic Research, Inc.
    4. Satish K. Jain & Ram Singh, 2002. "Efficient Liability Rules: Complete Characterization," Journal of Economics, Springer, vol. 75(2), pages 105-124, March.
    5. Kahan, Marcel, 1989. "Causation and Incentives to Take Care under the Negligence Rule," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 427-447, June.
    6. Cooter, Robert, 1998. "Expressive Law and Economics," Berkeley Olin Program in Law & Economics, Working Paper Series qt3w34j60j, Berkeley Olin Program in Law & Economics.
    7. Miceli, Thomas J., 1996. "Cause in fact, proximate cause, and the hand rule: Extending Grady's positive economic theory of negligence," International Review of Law and Economics, Elsevier, vol. 16(4), pages 473-482, December.
    8. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
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    Cited by:

    1. Allan M Feldman & Ram Singh, 2008. "Comparative Vigilance: a Simple Guide," Working Papers 2008-11, Brown University, Department of Economics.
    2. Acciarri Hugo A. & Tohmé Fernando & Castellano Andrea, 2016. "Causal Apportionment of Tort Liability: An Efficient Approach," Review of Law & Economics, De Gruyter, vol. 12(1), pages 37-55, March.

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    More about this item

    Keywords

    Causation in law; liability rules; total social costs; efficient liability rules; causation-liability; Nash equilibrium.;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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