Chapter

 An Assessment of Legal Liability as a Market‐Based Instrument

Kathleen Segerson

in Moving to Markets in Environmental Regulation

Published in print October 2006 | ISBN: 9780195189650
Published online January 2007 | e-ISBN: 9780199783694 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780195189650.003.0010
 							 An Assessment of Legal Liability as a Market‐Based Instrument

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This essay focuses on the deterrence effect of liability, recognizing that the motivation for imposition of liability (particularly retroactive imposition) may instead be victim compensation or corrective justice. It evaluates what is known about whether liability creates an effective market for environmental goods and services. It provides an overview of the issues regarding the impact of liability that have been addressed in the theoretical literature to identify key conditions or factors that can be expected to influence the effectiveness of liability as a policy tool. It then turns to a well-known and controversial example of the imposition of liability-liability under CERCLA, to demonstrate the role of some of these factors in a specific policy context. Finally, it looks more generally at the empirical literature that exists to see what, if anything, it suggests about the effectiveness of pricing environmental services through the use of liability.

Keywords: deterrence; environmental policy; absolute efficiency; relative efficiency; CERCLA

Chapter.  9262 words. 

Subjects: Economic Development and Growth

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