Liability laws and environmental policy: The logic of joint and several liability

Mothakapalli Venkatappa Rajeev Gowda, University of Pennsylvania

Abstract

This dissertation investigates the role of joint and several liability in recovering hazardous waste cleanup costs from polluters under Superfund or the Comprehensive Environmental Response, Compensation, and Liability Act. This liability rule's incentive effects and effectiveness in internalizing externalities are modelled, and it is shown that it involves a trade off between deterrence and compensation. Information asymmetry is a key problem. Proposed alternatives--the Strict rule and the Lenient rule--give rise to multiple Nash equilibria. Experiments are conducted to check whether truthful revelation is a focal point, balancing deterrence and compensation. The Strict rule has limited success while the Lenient rule is more robust and potentially useful for policy. Another focal "Compromise" strategy is shown to arise under the Lenient rule. Further explorations of joint and several liability's incorporation in policy are also conducted from the perspectives of political analysis, justice, and decision processes. A questionnaire survey's results indicate that key stakeholders' preferences are not consonant with current policy. Some respondents show evidence of decision biases. Such biases may explain the use of liability strategies and inefficiencies in policy.

Subject Area

Public administration|Economics|Law|Environmental science

Recommended Citation

Gowda, Mothakapalli Venkatappa Rajeev, "Liability laws and environmental policy: The logic of joint and several liability" (1992). Dissertations available from ProQuest. AAI9308580.
https://repository.upenn.edu/dissertations/AAI9308580

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