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Title:Enforcement of environmental liability in the case of uncertain causality and asymmetric information PDF Logo
Authors:Bartsch, Elga
Issue Date:1996
Series/Report no.:Kiel Working Papers 755
Abstract:In providing precautionary incentives and allocating environmental risk, liability for environmental damages faces two difficulties: randomness of damages incurred and nonobservability of precautionary measures. Hence, a major obstacle in enforcing legal claims is the difficulty of proving causation. In order to alleviate the proof of causation, the German Umwelthaftungsgesetz introduces a refutable causality presumption. When imperfect information is taken into account, this conditional reversal of the burden of proof cannot ensure optimal precaution. Using a principalagent model, optimality conditions for a modified strict liability rule is derived. A specific rule for the optimal allocation of environmental damages under probabilistic causation and asymmetric information is obtained using a linear model.
JEL:D80
K32
Q20
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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