The Economic Consequences of Liability Rules: In Defense of Common Law Liability

Written by specialists in law and economics, this book studies the role of liability rules in an effort to illustrate the possible consequences of statutory tampering with them. The contributors explain how statutory and common law liability rules evolved, how they work in current practice, and how changes in rules can alter economic outcomes in significant and unintended ways. Although price theory is the primary analytical tool employed in the study, the contributors also provide a wealth of institutional detail intended to illuminate the structure and operation of forces at work when questions of product or service liability arise.

Throughout, the contributors focus on the effects of individual decision making: how incentives faced by individuals are affected by liability rules and how the collective actions of purposeful individuals working in private markets and through the political process affect social outcomes. Among the specific topics addressed are using liability rules to deter government takings, the impact of government liability on private risk avoidance, the allocation of product liability by market share, liability and environmental quality, the effects of the flammability rule, deposit insurance and the savings and loan fiasco, and the political debate over automobile air bags. The contributors conclude that attempts to remedy alleged defects in the common law by legislative edict are not well grounded. Ideal as supplemental reading for courses in business and government, this volume will also be of significant interest to students of law and economics.

Addressing the "Liability Crisis" by Roger E. Meiners and Bruce Yandle
Common Law, Statute Law, and Liability Rules by Robert J. Staaf and Bruce Yandle
Do Liability Rules Deter Takings? by David D. Haddock and Fred S. McChesney
The Impact of Government Liability on Private Risk Avoidance by James L. Huffman
An Incentive to Avoid or Create Risks: Market Share Liability by Robert J. Staaf and Bruce Yandle
Deep Pockets, Insurance, and Taxes: The Implications of Uncertainty versus Risk for Product Liability Cases by Robert J. Staaf
Liability and Environmental Quality by Hugh H. Macaulay
Rules of Liability and the Demise of Superfund by Bruce Yandle
Consumer Protection, Government Liability, and the Flammability Rule by Gordon Shuford and Bruce Yandle
Deposit Insurance, Liability, and the S&L Mess by Roger E. Meiners and Bruce Yandle
Insurers, Auto Makers, and the Political Debate over Air Bags by Robert Kneuper
Selected Bibliography
Index

ROGER E. MEINERS is Professor of Economics at the University of Texas-Arlington.

BRUCE YANDLE is Alumni Professor of Economics at Clemson University and Director of the Strom Thurmond Institute. His previous works include The Political Limits of Environmental Regulation: Tracking the Unicorn (Quorum, 1989).