Abstract
The economic analysis of liability law has been established as a field of intensive research during the last decades. Starting with Calabresi (1961) and Brown (1973), many articles dealt with the problem of optimal liability rules, among others Shavell (1980), (1982), (1987), Adams (1985) and Endres (1991). Surprisingly most of the research concentrates on incentive problems of liability law only, by investigating which liability rules can induce injurers and victims to choose the optimal level of care. Little attention was directed at the distributional consequences of liability and their efficiency implications. Especially the risk allocation function of liability law has been neglected in much of the literature, although incentive compatibility and optimal risk allocation are equally important and interdependent objectives in economic theory.
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