Liability Rules and Accident Prevention in the Workplace: Empirical Evidence from the Early Twentieth Century

Abstract

THE effect of liability structures on accident prevention has been one of the most important issues in the literature on law and economics. Often the discussion has centered on theoretical comparisons of the efficiency of negligence and strict liability rules. There is general agreement with Coase that, under assumptions of zero transaction costs, costless administration of liability rules, and competitive markets, any assignment of liability leads to efficient accident prevention.' When the assumptions of zero transaction and administrative costs are relaxed, however, the Coase result no longer holds. In theoretical work, scholars have shown that the relative efficiency of liability rules varies and may remain uncertain when different types of transaction costs are analyzed.2 Recently the discussion