IDEAS home Printed from https://ideas.repec.org/p/zbw/darddp/dar_36799.html
   My bibliography  Save this paper

How liable should an exporter be? The case of trade in hazardous goods

Author

Listed:
  • Helm, Carsten

Abstract

This paper analyzes liability issues in the context of internationally traded goods like hazardous waste. If waste disposers of a small open economy are judgement-proof, then the extension of liability to waste exporters distorts the factor allocation and may reduce disposal care. Hence the optimal extension is partial at most. However, extending liability increases incentives of the waste importing country to hold domestic disposers liable. Interaction through the price system and through contracts that condition payments for disposal services on the occurrence of an accident yield identical outcomes if disposers are judgement-proof.

Suggested Citation

  • Helm, Carsten, 2005. "How liable should an exporter be? The case of trade in hazardous goods," Darmstadt Discussion Papers in Economics 153, Darmstadt University of Technology, Department of Law and Economics.
    • Handle: RePEc:zbw:darddp:dar_36799
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/32067/1/50436037X.PDF
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Laffont, Jean-Jacques, 1995. "Regulation, moral hazard and insurance of environmental risks," Journal of Public Economics, Elsevier, vol. 58(3), pages 319-336, November.
    2. T. Randolph Beard, 1990. "Bankruptcy and Care Choice," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 626-634, Winter.
    3. repec:bla:germec:v:7:y:2006:i::p:463-470 is not listed on IDEAS
    4. Dionne, Georges & Spaeter, Sandrine, 2003. "Environmental risk and extended liability: The case of green technologies," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1025-1060, May.
    5. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    6. Demougin Dominique & Helm Carsten, 2006. "Moral Hazard and Bargaining Power," German Economic Review, De Gruyter, vol. 7(4), pages 463-470, December.
    7. Dieter Balkenborg, 2001. "How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk: Comment," American Economic Review, American Economic Association, vol. 91(3), pages 731-738, June.
    8. Boyer, Marcel & Laffont, Jean-Jacques, 1997. "Environmental risks and bank liability," European Economic Review, Elsevier, vol. 41(8), pages 1427-1459, August.
    9. Tracy R. Lewis & David E. M. Sappington, 2001. "How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk: Comment," American Economic Review, American Economic Association, vol. 91(3), pages 724-730, June.
    10. Posey, Lisa Lipowski, 1993. "Limited liability and incentives when firms can inflict damages greater than net worth," International Review of Law and Economics, Elsevier, vol. 13(3), pages 325-330, September.
    11. Boyd, James & Ingberman, Daniel E, 1997. "The Search for Deep Pockets: Is "Extended Liability" Expensive Liability?," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 232-258, April.
    12. Pitchford, Rohan, 1998. "Moral hazard and limited liability: The real effects of contract bargaining," Economics Letters, Elsevier, vol. 61(2), pages 251-259, November.
    13. Hiriart, Yolande & Martimort, David, 2004. "Environmental Risk Regulation and Liability under Adverse Selection and Moral Hazard," IDEI Working Papers 256, Institut d'Économie Industrielle (IDEI), Toulouse.
    14. Eberhard Feess, 1999. "Lender Liability for Environmental Harm: An Argument Against Negligence Based Rules," European Journal of Law and Economics, Springer, vol. 8(3), pages 231-250, November.
    15. Copeland, Brian R., 1991. "International trade in waste products in the presence of illegal disposal," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 143-162, March.
    16. Rauscher, Michael, 1997. "International Trade, Factor Movements, and the Environment," OUP Catalogue, Oxford University Press, number 9780198290506.
    17. Shavell, S., 1986. "The judgment proof problem," International Review of Law and Economics, Elsevier, vol. 6(1), pages 45-58, June.
    18. 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)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wellhausen, Rachel L, 2023. "Waste Not, Want Not: Tariffs as Environmental Protection," Institute on Global Conflict and Cooperation, Working Paper Series qt40m4179x, Institute on Global Conflict and Cooperation, University of California.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Seshimo, Hiroyuki, 2022. "Optimal extended liability rule in a competitive financial market with heterogeneous borrower firms," Journal of Mathematical Economics, Elsevier, vol. 98(C).
    2. Bidénam Kambia-Chopin, 2010. "Environmental risks, the judgment-proof problem and financial responsibility," European Journal of Law and Economics, Springer, vol. 30(2), pages 77-87, October.
    3. Ichinose, Daisuke, 2011. "Contractor selection problem under extended liability," International Review of Law and Economics, Elsevier, vol. 31(1), pages 48-57, March.
    4. Hutchinson, Emma & van 't Veld, Klaas, 2005. "Extended liability for environmental accidents: what you see is what you get," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 157-173, January.
    5. Yeon‐Koo Che & Kathryn E. Spier, 2008. "Strategic judgment proofing," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 926-948, December.
    6. Gérard Mondello, 2012. "Strict Liability, Capped Strict Liability, and Care Effort under Asymmetric Information," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(2), pages 232-251, June.
    7. Marcel Boyer & Donatella Porrini, 2007. "Sharing Liability Between Banks and Firms: The Case of Industrial Safety Risk," CIRANO Working Papers 2007s-04, CIRANO.
    8. Yolande Hiriart & David Martimort, 2006. "The benefits of extended liability," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 562-582, September.
    9. Feess, Eberhard & Hege, Ulrich, 2003. "Safety monitoring, capital structure, and "financial responsibility"," International Review of Law and Economics, Elsevier, vol. 23(3), pages 323-339, September.
    10. Mondello, Gérard, 2012. "La responsabilité environnementale des prêteurs : difficultés juridiques et ensemble des possibles," L'Actualité Economique, Société Canadienne de Science Economique, vol. 88(2), pages 257-278, Juin.
    11. Juan José Ganuza & Fernando Gómez, 2003. "Optimal negligence rule under limited liability," Economics Working Papers 759, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2004.
    12. van 't Veld, Klaas, 2006. "Hazardous-industry restructuring to avoid liability for accidents," International Review of Law and Economics, Elsevier, vol. 26(3), pages 297-322, September.
    13. Julien Jacob & Sandrine Spaeter, 2016. "Large-Scale Risks and Technological Change: What About Limited Liability?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(1), pages 125-142, February.
    14. Sandrine SPAETER, 2002. "Principe de precaution et comportements preventifs des firmes face aux risques environnementaux," Working Papers of BETA 2002-08, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    15. 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.
    16. Hiriart, Yolande & Thomas, Lionel, 2017. "The optimal regulation of a risky monopoly," International Journal of Industrial Organization, Elsevier, vol. 51(C), pages 111-136.
    17. Charreire, Maxime & Langlais, Eric, 2021. "Should environment be a concern for competition policy when firms face environmental liability?," International Review of Law and Economics, Elsevier, vol. 67(C).
    18. Anyangah Joshua, 2012. "Mitigating Judgment Proofness: Information Acquisition vs. Extended Liability," Review of Law & Economics, De Gruyter, vol. 8(3), pages 657-696, December.
    19. André SCHMITT & Sandrine SPAETER, 2002. "Improving the Prevention of Environmental Risks with Convertible Bonds," Working Papers of BETA 2002-14, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    20. Gérard Mondello, 2017. "Lenders and Risky Activities: Strict Liability or Negligence Rule?," GREDEG Working Papers 2017-13, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

    More about this item

    Keywords

    extended liability; hazardous waste trade; externalities; moral hazard;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • F18 - International Economics - - Trade - - - Trade and Environment
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:darddp:dar_36799. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/vwthdde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.