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A Microeconomic Analysis toward Building Liability Lawin the Post-Earthquake Era

Author

Listed:
  • Takayuki Oishi

    (Aomori public university)

  • Shin Sakaue

    (Sophia University)

Abstract

First, we investigate which type of the liability law that protects nuclear power plants against catastrophe is socially optimal. We show that when a firm with a few funds is managed under the strict liability, maximization of social welfare is impossible since the firm may not cope with the damage by a catastrophic disaster. On the other hand, when the government set suitable safety standards in the case where a firm has a few, funds, maximization of social welfare is possible by using the negligence rule. second, we investigate a normative analysis of liability problems that deal with how to share joint liability among agents. We axiomatize the Shapley value

Suggested Citation

  • Takayuki Oishi & Shin Sakaue, 2014. "A Microeconomic Analysis toward Building Liability Lawin the Post-Earthquake Era," KIER Working Papers 890, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:890
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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP890.pdf
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    References listed on IDEAS

    as
    1. S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
    2. William Thomson, 2007. "Cost allocation and airport problems," RCER Working Papers 537, University of Rochester - Center for Economic Research (RCER).
    3. Dehez, Pierre & Ferey, Samuel, 2013. "How to share joint liability: A cooperative game approach," Mathematical Social Sciences, Elsevier, vol. 66(1), pages 44-50.
    4. Shavell, S., 1986. "The judgment proof problem," International Review of Law and Economics, Elsevier, vol. 6(1), pages 45-58, June.
    5. Pitchford, Rohan, 1995. "How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk," American Economic Review, American Economic Association, vol. 85(5), pages 1171-1186, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    the Great East Japan Earthquake; law and economics; catastrophic risk; liability game; the Shapley value;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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