Environmental Liability Law and Induced Technical Change – The Role of Discounting

Abstract

We analyse the incentives of environmental liability law for inducing progress to emission abatement technology. We consider three liability rules: strict liability, a negligence rule with an emission norm as the due care standard, and a double negligence rule which combines the emission standard with an abatement technology norm. In the case of distortive discounting, i.e. where the private discount rate deviates from the social one, we show, how the level of distortion influences the ranking of liability rules, according to the criterion of generated social cost. Copyright Springer Science+Business Media, Inc. 2007discounting, emission abatement technology, environmental liability law, induced technical change,

Environmental liability under uncertain causation

“…Third, second best optimal divisions of damages between multiple tortfeasors are analyzed in Arlen (1992), Kornhauser and Revesz (1994) and Feess and Hege (1999), for instance. Finally and most recently, incentives generated by liability rules to invest in advanced abatement technologies have been analyzed in Endres and Bertram (2006) and Endres et al (2007). We are not aware of papers analyzing the interplay between care and investments in a model with uncertain causation and imperfectly observable care levels.…”

Environmental liability law and R&D subsidies: results on the screening of firms and the use of uniform policy

“…Overall, the literature on technical change and environmental policy instruments has neglected environmental liability law. The exceptions to date are Endres and Bertram (2006), Endres et al (2007), Endres et al (2008), and Endres and Friehe (2011a), Endres and Friehe (2011b), Jacob (2015) in addition to Endres et al (2015) referred to above. 8 Overall, our comparison of the liability rules in the present paper leads to the following results: We find that the performances of strict liability and negligence differ in the two policy scenarios analyzed below.…”

The monopolistic polluter under environmental liability law: incentives for abatement and R&D

“…However, most of these analyses have also been confined to the consideration of transferable discharge permits, emission taxes, and command and control regulations. Recently, the range of environmental policy instruments considered in the context of induced technical change has been extended to environmental liability law (see Endres and Bertram 2006, Endres et al 2007, Endres and Friehe 2011a.…”