2008_04_01_Notes - UP FRONT, 4-1-08 Reading for next time:...

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UP FRONT, 4-1-08 Reading for next time:  Look for email. Outline for Today 1) Fees vs. tradable permit systems 2) Another economic incentive-based regulation:  liability 3) Incentive-based regulations vs. command and  control
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Liability is another economic incentive instrument for regulating environmental risks Symbols : x: Precaution, by reducing probability or severity of problem C(x): Cost ED(x): Expected Damage C(x) and ED(x) likely to be concave up Social planner’s objective :
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Liability is another economic incentive instrument for regulating environmental risks Potential injurer’s objective without liability Potential injurer’s objective with strict (“no-fault”) liability Strict liability: injurer compensates victims no matter how careful injurer was to avoid causing injury.
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Liability is another economic incentive instrument for regulating environmental risks Potential injurer’s objective with liability only in case of negligence Liability only in case of negligence (“negligence,” but I
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This note was uploaded on 02/19/2009 for the course AEM 4510 taught by Professor Shawhan,d. during the Spring '08 term at Cornell University (Engineering School).

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2008_04_01_Notes - UP FRONT, 4-1-08 Reading for next time:...

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