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The Choice of Instruments for Environmental Policy: Liability or Regulation?

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  • Marcel Boyer
  • Donatella Porrini

Abstract

We address in this paper the problem of comparing and choosing among different policy instruments to implement the incentive objective of an efficient deterrence of environmental degradation and the remedy objective of an efficient clean-up of damages and a proper compensation of victims. Two main instruments are considered, namely the assignment of legal liability for environmental damage, such as in the American CERCLA and in the European White Paper, including extended liability provisions, and the design of an incentive regulation framework. Our results derive from a formal and structured analytical approach to modeling the economic interactions between different decision makers such as governments, firms, regulators and financiers. Dans cet article, nous comparons différents instruments visant une protection efficace contre la dégradation de l'environnement, une couverture efficace des dommages et une compensation convenable aux victimes. Nous considérons deux instruments principaux, à savoir un régime de réglementation incitative et un régime de responsabilité légale en cas de dommages environnementaux, tel qu'on le trouve dans le CERCLA américain et le White Paper européen qui comportent des provisions de responsabilité élargie. Nous développons une approche analytique structurée et formelle à la modélisation des interactions économiques entre les différents décideurs que sont les gouvernements, les entreprises, les régulateurs et les financiers.

Suggested Citation

  • Marcel Boyer & Donatella Porrini, 2002. "The Choice of Instruments for Environmental Policy: Liability or Regulation?," CIRANO Working Papers 2002s-17, CIRANO.
    • Handle: RePEc:cir:cirwor:2002s-17
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    File URL: https://cirano.qc.ca/files/publications/2002s-17.pdf
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    References listed on IDEAS

    as
    1. Nathalie de Marcellis-Warin & Erwann Michel-Kerjan, 2001. "The Public-Private Sector Risk-Sharing in the French Insurance "Cat. Nat. System"""," CIRANO Working Papers 2001s-60, CIRANO.
    2. Rohan Pitchford, 2001. "How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk: Reply," American Economic Review, American Economic Association, vol. 91(3), pages 739-745, June.
    3. Steven Shavell, 1983. "Liability for Harm Versus Regulation of Safety," NBER Working Papers 1218, National Bureau of Economic Research, Inc.
    4. Shavell, S., 1986. "The judgment proof problem," International Review of Law and Economics, Elsevier, vol. 6(1), pages 45-58, June.
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    Citations

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    Cited by:

    1. Pierre Bentata, 2014. "Liability as a complement to environmental regulation: an empirical study of the French legal system," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(3), pages 201-228, July.
    2. Marcel Boyer & Donatella Porrini, 2008. "The Efficient Liability Sharing Factor For Environmental Disasters: Lessons For Optimal Insurance Regulation," CIRANO Working Papers 2008s-03, CIRANO.
    3. Marcel Boyer & Donatella Porrini, 2007. "Sharing Liability Between Banks and Firms: The Case of Industrial Safety Risk," CIRANO Working Papers 2007s-04, CIRANO.
    4. Wasylyniuk, Chad R. & Bessel, Kristan M. & Kerr, William A. & Hobbs, Jill E., 2003. "The Evolving International Trade Regime For Food Safety And Environmental Standards: Potential Opportunities And Constraints For Saskatchewan'S Beef Feedlot Industry," Reports 23937, Estey Centre for Law and Economics in International Trade.
    5. Marcel Boyer & Donatella Porrini, 2004. "Modelling the choice between regulation and liability in terms of social welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 37(3), pages 590-612, August.
    6. Donatella Porrini & Reimund Schwarze, 2014. "Insurance models and European climate change policies: an assessment," European Journal of Law and Economics, Springer, vol. 38(1), pages 7-28, August.

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    More about this item

    Keywords

    Environmental policy; extended liability; regulatory capture; instrument choice; Politique environnementale; responsabilité élargie; capture des régulateurs; choix d'instruments;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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