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Imperfect competition and liability rules for invisible harm

Abstract : This dissertation studies the economic efficiency of different liability designs when firms pertaining to the same industry generate an indivisible harm to a third party victim, such as environmental good. The first chapter studies the influence of different liability regimes on firms' choices regarding care spending and output level, where firms compete à la Cournot. With a liability regime based on strict liability augmented with an equal sharing and an optimal damages multiplier, "conventional" competition policy induces a convergence towards the social optimum. Other liability regimes justify the use of unconventional competition policy.The second chapter studies the influence of sharing rules on the likelihood of collusion among firms subject to strict liability and competing à la Cournot. The overall effect on the collusion sustainability depends on the harm's modelization. If harm is linear in the aggregate production, then the sharing rule used has no influence on the collusion sustainability. But if harm is cumulative, then collusion is less likely to occur if damages are shared in proportion of the market share rather than equally shared.The third chapter studies the implications for environmental liability lawsof two doctrines, Joint and Several Liability and Joint Liability. None of the liability regimes allow to decentralize the social optimum - irrespective of the legal doctrine used – or strictly dominates the other. Coupled with a strict liability, the use of optimal damages multipliers leads firms to choose the same equilibrium outputs - care level being socially optimal given the level of output. In constrast, negligence appears to be unstable.
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Submitted on : Friday, April 22, 2022 - 4:45:09 PM
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  • HAL Id : tel-03649607, version 1


Maxime Charreire. Imperfect competition and liability rules for invisible harm. Economics and Finance. Université de Nanterre - Paris X, 2021. English. ⟨NNT : 2021PA100126⟩. ⟨tel-03649607⟩



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