Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46930
Authors: 
Bartsch, Elga
Year of Publication: 
1996
Series/Report no.: 
Kiel Working Paper 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

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