Market Share Liability in Personal Injury and Public Nuisance Litigation: An Economic Analysis

Abstract

This paper analyzes the legal doctrine of market share liability from an economic perspective. It explains the underlying economic, or quasi-economic, basis for the doctrine: to obtain appropriate cost internalization of harm-causing behavior where it is not possible to identify which of many producers of identical harm-causing products harmed any single victim. The paper discusses the recent extension of the concept in the lead paint litigation in the U.S. in both products liability and public nuisance cases. The article discusses the very particular requirements necessary for the doctrine to appropriately internalize costs. It also discusses the implications of the passage of time as between manufacture and harm for the application of the doctrine and addresses the view that market share liability can effectively provide a form of insurance for loss. The article shows that application of the doctrine of market share liability serves in many contexts—including with respect to lead paint—chiefly as a form of taxation, which cannot generally be defended on social welfare grounds.