An Economic Analysis of the Choice between Enterprise and Personal Liability for Accidents

Kornhauser, Lewis A.

doi:10.2307/3480271

Cited by 149 publications

(59 citation statements)

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“…Hence, once the asset constraint in equation (28) binds, a further increase in the employees' formal fine does not increase the 15 A similar result is reached in a general cooperate crime model by Kornhauser (1982 …”

Section: Itsupporting

confidence: 60%

“…There are many examples of employees making decisions on behalf of a firm, including decisions to violate regulations (Kornhauser, 1982;Arlen, 2013). In terms of fisheries, this is perhaps particularly relevant in large-scale fisheries, where firms own vessels and often employ 1 Nøstbakken (2008) contains an overview of the fisheries economic literature on law enforcement.…”

Section: Introductionmentioning

confidence: 99%

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A corporate-crime perspective on fisheries: liability rules and non-compliance

Jensen¹

2015

Envir. Dev. Econ.

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Abstract:The existing fisheries economics literature analyzes compliance problems by treating the fishing firm as one cohesive unit, but in many cases, violations are committed by agents acting on behalf of a firm. To account for this, we analyze the principal-agent relationship within the fishing firm. In the case where the firm directly benefits from illegal fishing, the firm must induce its crew to violate regulations through the incentive scheme. Within this framework, we analyze how the allocation of liability between fishing firms and crew affects quota violations and the ability to design a socially efficient fisheries policy. We show that without wage frictions, it does not matter whom is held liable. However, under the commonly used share systems of remuneration, crew liability generally yields a more efficient outcome than firm liability. Furthermore, asset restrictions may affect the outcome under various liability rules. JEL code: Q2

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Section: Itsupporting

confidence: 60%

Section: Introductionmentioning

confidence: 99%

A corporate-crime perspective on fisheries: liability rules and non-compliance

Jensen¹

2015

Envir. Dev. Econ.

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“…13 Law and economics literature has justified the employer's vicarious liability for accidents caused by the employee on three grounds: (1) the victim's inability to identify the injurer among all employees of a firm (discussed in the text accompanying this footnote); (2) the employee's insolvency (which will be discussed below in the text; and (3) the employee's risk-aversion (which will not be discussed here as it does not bear on the problems at issue). The first economic analyses of vicarious liability where provided by Sykes (1981) and Kornhauser (1982). For a recent analysis see also Dari-Mattiacci and Parisi (2003).…”

Section: The Sources Of the Problemsmentioning

confidence: 99%

Disappearing Defendants v. Judgment Proof Injurers: Upgrading the Theory of Tort Law Failures

Dari‐Mattiacci

Mangan

2005

SSRN Journal

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Do injurers' insolvency and victims' reluctance to sue affect accident prevention in the same way? Are these circumstances less of a problem under the negligence rule than under strict liability? We argue, contrary to the literature, that the answer is, in most cases, negative and make three main points. First, the judgment proof problem and the disappearing defendant problem are shown to have different effects on injurers' behavior and hence yield dissimilar levels of social welfare. Second, when these two problems occur simultaneously they may have offsetting effects. Third, the negligence rule is superior to strict liability only under some conditions, which are not always satisfied when cause in fact is considered. In this case, we find that social welfare under negligence may actually be less than, the same as, or greater than under strict liability. ABSTRACTDo injurers' insolvency and victims' reluctance to sue affect accident prevention in the same way? Are these circumstances less of a problem under the negligence rule than under strict liability? We argue, contrary to the literature, that the answer is, in most cases, negative and make three main points. First, the judgment proof problem and the disappearing defendant problem are shown to have different effects on injurers' behavior and hence yield dissimilar levels of social welfare. Second, when these two problems occur simultaneously they may have offsetting effects. Third, the negligence rule is superior to strict liability only under some conditions, which are not always satisfied when cause in fact is considered. In this case, we find that social welfare under negligence may actually be less than, the same as, or greater than under strict l iability. Our model encompasses different precaution technologies as well as monetary vs. non-monetary precautions.

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“…General analyses of corporate crime in a principal-agent model are provided by Kornhauser (1982), Sykes (1984), Newman and Wright (1990), Polinsky and Shavell (1993), Davis (1996), and Garoupa (2000). Our model introduced in Section 3.1 will follow the structure of Garoupa (2000) closely (with some slight changes in assumptions and notation) since his comprehensive analysis nests much of the previous work.…”

Section: Five Theoretical Principlesmentioning

confidence: 99%