Empirical evidence evaluating the efficiency of economic instruments is still rare, despite significant theoretical advances over the last decades. The objective of this paper is to evaluate one form of environmental taxation, the French tax on air pollution from 1990-99. While starting out in 1985 as a tax levied only on emissions of sulphur dioxide (SO2 ), the tax base was subsequently extended to encompass also emissions of nitrogen oxides (NOx), hydrochloric acid (HCl), and volatile organic compounds (VOC). The revenues of the French tax on air pollution were earmarked for abatement subsidies and the financing of air quality surveillance systems. Using a plant-level database, we find a negative, significant effect of the tax on emissions of SO2, NOx, and HCl. The abatement elasticity with regard to the tax is quite small, however.
{"title":"The French Tax on Air Pollution: Some Preliminary Results On its Effectiveness","authors":"Katrin Millock, Céline Nauges","doi":"10.2139/ssrn.419082","DOIUrl":"https://doi.org/10.2139/ssrn.419082","url":null,"abstract":"Empirical evidence evaluating the efficiency of economic instruments is still rare, despite significant theoretical advances over the last decades. The objective of this paper is to evaluate one form of environmental taxation, the French tax on air pollution from 1990-99. While starting out in 1985 as a tax levied only on emissions of sulphur dioxide (SO2 ), the tax base was subsequently extended to encompass also emissions of nitrogen oxides (NOx), hydrochloric acid (HCl), and volatile organic compounds (VOC). The revenues of the French tax on air pollution were earmarked for abatement subsidies and the financing of air quality surveillance systems. Using a plant-level database, we find a negative, significant effect of the tax on emissions of SO2, NOx, and HCl. The abatement elasticity with regard to the tax is quite small, however.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125275987","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this report commissioned by the Australian Government, the Commission found that claims management practices for public liability insurance should not prevent benefits from recent government policy changes being passed onto consumers. The Commission found that the market environment in which public liability claims are managed remains competitive and should provide sufficient incentives for insurers to make their claims management practices efficient and cost effective. While the broad steps in managing claims are common across the industry, claims management practices between insurers vary significantly because of the diverse nature of risks covered and differences in institutional arrangements and regulatory regimes. As a result, there is no single best practice for claims management.
{"title":"Public Liability Claims Management","authors":"Productivity Commission","doi":"10.2139/ssrn.401722","DOIUrl":"https://doi.org/10.2139/ssrn.401722","url":null,"abstract":"In this report commissioned by the Australian Government, the Commission found that claims management practices for public liability insurance should not prevent benefits from recent government policy changes being passed onto consumers. The Commission found that the market environment in which public liability claims are managed remains competitive and should provide sufficient incentives for insurers to make their claims management practices efficient and cost effective. While the broad steps in managing claims are common across the industry, claims management practices between insurers vary significantly because of the diverse nature of risks covered and differences in institutional arrangements and regulatory regimes. As a result, there is no single best practice for claims management.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-01-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116413048","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the impact of lowered BAC limits on alcohol related traffic fatalities. Unlike previous studies that find significant reductions in traffic fatalities after legal limits are reduced, this paper shows that once controlling explicitly for enforcement efforts and the severity of penalties the impact of lowered BAC limits is insignificant. This study is important because national legislation was passed in 2000 requiring all states to have a legal limit of 0.08 BAC by 2004. At the time, proponents of the legislation claimed an estimated 600 lives would be saved nation-wide because of the new legal limits. This study shows that this estimate was most likely overstated.
{"title":"Changes in the Law vs. Changes in the Penalties: An Application to Blood Alcohol Content Limits","authors":"C. Depken","doi":"10.2139/ssrn.370027","DOIUrl":"https://doi.org/10.2139/ssrn.370027","url":null,"abstract":"This paper investigates the impact of lowered BAC limits on alcohol related traffic fatalities. Unlike previous studies that find significant reductions in traffic fatalities after legal limits are reduced, this paper shows that once controlling explicitly for enforcement efforts and the severity of penalties the impact of lowered BAC limits is insignificant. This study is important because national legislation was passed in 2000 requiring all states to have a legal limit of 0.08 BAC by 2004. At the time, proponents of the legislation claimed an estimated 600 lives would be saved nation-wide because of the new legal limits. This study shows that this estimate was most likely overstated.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125089969","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The widespread commercial cultivation of GM crops in the EU and the UK is getting closer. Intense concerns about the uncertain health and environmental effects of GM farming have been the subject of high profile debate. The effects of GM farming on existing forms of agriculture, raised by the prospect of cross–pollination by GM seed, provoke similarly polarised views. However, whilst regulatory developments have been strongly influenced by environmental and health concerns, the socio–economic impact of GM agriculture is relatively neglected in current regulatory approaches. The authors examine various possible legal responses to unwanted cross–pollination by GM seed, and contend that the law is likely to struggle to cope with the conflicts that may arise.
{"title":"Liability for the Escape of GM Seeds: Pursuing the 'Victim'?","authors":"Maria Lee, R. Burrell","doi":"10.1111/1468-2230.00393","DOIUrl":"https://doi.org/10.1111/1468-2230.00393","url":null,"abstract":"The widespread commercial cultivation of GM crops in the EU and the UK is getting closer. Intense concerns about the uncertain health and environmental effects of GM farming have been the subject of high profile debate. The effects of GM farming on existing forms of agriculture, raised by the prospect of cross–pollination by GM seed, provoke similarly polarised views. However, whilst regulatory developments have been strongly influenced by environmental and health concerns, the socio–economic impact of GM agriculture is relatively neglected in current regulatory approaches. The authors examine various possible legal responses to unwanted cross–pollination by GM seed, and contend that the law is likely to struggle to cope with the conflicts that may arise.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-12-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122134686","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The consequences of commitment failure have been missing from debates about the decentralized regulation of automobile emissions and other sources of local consumption externalities. Even when the direct external effects of such products are limited to a single jurisdiction, the presence of increasing returns-to-scale production causes one jurisdiction's choice of regulatory standard to affect the prices and availability of goods elsewhere. Decentralized regulatory equilibria may be inefficient as a result. Because of a commitment failure, production may be split between standards-and consumers denied the full range of products-when it is efficient to have standards that allow products to be consumed everywhere. Coordination failures may cause similar inefficiencies. The results question the usefulness of the principle of subsidiarity as commonly employed. Copyright 2005 Blackwell Publishing Inc..
{"title":"Inefficient Local Regulation of Local Externalities","authors":"Gregory Besharov, Ari Zweiman","doi":"10.2139/ssrn.413360","DOIUrl":"https://doi.org/10.2139/ssrn.413360","url":null,"abstract":"The consequences of commitment failure have been missing from debates about the decentralized regulation of automobile emissions and other sources of local consumption externalities. Even when the direct external effects of such products are limited to a single jurisdiction, the presence of increasing returns-to-scale production causes one jurisdiction's choice of regulatory standard to affect the prices and availability of goods elsewhere. Decentralized regulatory equilibria may be inefficient as a result. Because of a commitment failure, production may be split between standards-and consumers denied the full range of products-when it is efficient to have standards that allow products to be consumed everywhere. Coordination failures may cause similar inefficiencies. The results question the usefulness of the principle of subsidiarity as commonly employed. Copyright 2005 Blackwell Publishing Inc..","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114605329","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Requirements that parties have assets of at least a minimum level in order to participate in an activity are frequently imposed. A principal rationale for minimum asset requirements is considered in this article potential injurers have stronger incentives to prevent harm, or not to engage in harmful activities, provided that they have at least the required level of assets at stake if they are sued for causing harm. The optimal minimum asset requirement generally reflects a tradeoff between this advantage and the disadvantage that some parties with assets below a required level ought to engage in the activity (because the benefits they would obtain exceed the expected harm they would cause). Additionally, it is emphasized that minimum asset requirements are socially desirable only when the victims of harm are not customers of firms. When victims of harm are customers of firms, minimum asset requirements are socially undesirable.
{"title":"Minimum Asset Requirements","authors":"S. Shavell","doi":"10.2139/SSRN.362820","DOIUrl":"https://doi.org/10.2139/SSRN.362820","url":null,"abstract":"Requirements that parties have assets of at least a minimum level in order to participate in an activity are frequently imposed. A principal rationale for minimum asset requirements is considered in this article potential injurers have stronger incentives to prevent harm, or not to engage in harmful activities, provided that they have at least the required level of assets at stake if they are sued for causing harm. The optimal minimum asset requirement generally reflects a tradeoff between this advantage and the disadvantage that some parties with assets below a required level ought to engage in the activity (because the benefits they would obtain exceed the expected harm they would cause). Additionally, it is emphasized that minimum asset requirements are socially desirable only when the victims of harm are not customers of firms. When victims of harm are customers of firms, minimum asset requirements are socially undesirable.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133452131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I augment the standard rational addiction model to include an insurance component whereby the effects of addiction can be mitigated. The model implies that increasing the level of insurance in the future induces a forward-looking individual to consume more of a harmfully addictive good currently. I test this implication using the adoption of mental health parity mandates in some states during the 1990s as an exogenous shock on the availability of future insurance. I examine the effects of this shock on the consumption of alcohol and find that parity legislation led to a statistically significant increase in alcohol consumption. To account for the possible endogeneity of the adoption of mental health parity mandates, I perform an instrumental variables analysis of beer consumption, and find that my original analysis underestimates the effect by a factor of ten.
{"title":"Have a Drink on Us: Mental Health Parity, Rational Addiction, and Off-Setting Behavior","authors":"Jonathan Klick","doi":"10.2139/ssrn.338200","DOIUrl":"https://doi.org/10.2139/ssrn.338200","url":null,"abstract":"I augment the standard rational addiction model to include an insurance component whereby the effects of addiction can be mitigated. The model implies that increasing the level of insurance in the future induces a forward-looking individual to consume more of a harmfully addictive good currently. I test this implication using the adoption of mental health parity mandates in some states during the 1990s as an exogenous shock on the availability of future insurance. I examine the effects of this shock on the consumption of alcohol and find that parity legislation led to a statistically significant increase in alcohol consumption. To account for the possible endogeneity of the adoption of mental health parity mandates, I perform an instrumental variables analysis of beer consumption, and find that my original analysis underestimates the effect by a factor of ten.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"75 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-10-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124460677","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the incentives that arise in a two-period agency relationship with moral hazard when agents are subject to limited liability. Since the existence of limited liability creates rent the principal can motivate an agent by credibly threatening him to be fired. It is shown that a combination of a two-period contract, where the agent is fired after period one in case of poor performance and retained otherwise, and a one-period contract optimally implements high effort. In particular, this combination is strictly better than a two-period contract, where the agent is retained in period two for sure. Moreover, there is a combination of one-period contracts that is equivalent to the optimal combination. While the second-period contract is the same as the optimal contract in the static model, the first-period contract pays a lower bonus in case of success. In an extension of the model "learning by doing" is considered. It turns out that the ranking of contracts is reversed if the increase in revenues due to "learning by doing" is sufficiently strong. In addition, a commitment problem arises which makes short-term contracting strictly worse than long-term contracting.
{"title":"Repeated Moral Hazard Under Limited Liability","authors":"J. Bierbaum","doi":"10.2139/ssrn.315780","DOIUrl":"https://doi.org/10.2139/ssrn.315780","url":null,"abstract":"This paper studies the incentives that arise in a two-period agency relationship with moral hazard when agents are subject to limited liability. Since the existence of limited liability creates rent the principal can motivate an agent by credibly threatening him to be fired. It is shown that a combination of a two-period contract, where the agent is fired after period one in case of poor performance and retained otherwise, and a one-period contract optimally implements high effort. In particular, this combination is strictly better than a two-period contract, where the agent is retained in period two for sure. Moreover, there is a combination of one-period contracts that is equivalent to the optimal combination. While the second-period contract is the same as the optimal contract in the static model, the first-period contract pays a lower bonus in case of success. In an extension of the model \"learning by doing\" is considered. It turns out that the ranking of contracts is reversed if the increase in revenues due to \"learning by doing\" is sufficiently strong. In addition, a commitment problem arises which makes short-term contracting strictly worse than long-term contracting.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126847800","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the presence of scientific uncertainty many actions may end up in a catastrophic event. Many argue that in such cases the precautionary principle should be adopted. Unfortunately this principle is not clear-cut. The main purpose of this paper is to set up a model, which allows establishing the determinants and consequently the level of the precautionary acceptable cost. The model allows treating in a single framework ambiguity, catastrophic events and agency problem. The acceptable cost will be essentially determined as the amount of transfers or subsidy that the public body should direct to the agents in order to elicit the level of effort which - on the basis of the principalis most pessimistic forecasts - has the higher chances of maximizing the principal welfare and preventing the catastrophic event. The model refers to the BSE epidemic but it could be easily applied to other situations in which Knightian uncertainty (ambiguity) makes catastrophic events quite likely.
{"title":"Institutions and the Precautionary Principle: The Case of Mad Cow Disease","authors":"Marcello Basili, M. Franzini","doi":"10.2139/ssrn.326590","DOIUrl":"https://doi.org/10.2139/ssrn.326590","url":null,"abstract":"In the presence of scientific uncertainty many actions may end up in a catastrophic event. Many argue that in such cases the precautionary principle should be adopted. Unfortunately this principle is not clear-cut. The main purpose of this paper is to set up a model, which allows establishing the determinants and consequently the level of the precautionary acceptable cost. The model allows treating in a single framework ambiguity, catastrophic events and agency problem. The acceptable cost will be essentially determined as the amount of transfers or subsidy that the public body should direct to the agents in order to elicit the level of effort which - on the basis of the principalis most pessimistic forecasts - has the higher chances of maximizing the principal welfare and preventing the catastrophic event. The model refers to the BSE epidemic but it could be easily applied to other situations in which Knightian uncertainty (ambiguity) makes catastrophic events quite likely.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130998327","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The purpose of this briefing paper is to assess the implications of natural disasters for the supply of home insurance. We focus on the risk of hurricanes and earthquakes. Our analysis begins with a review of the challenges that catastrophes pose for the insurance mechanism and how insurers seek to overcome these challenges. We then examine insurance market conditions in selected jurisdictions in the U.S. and identify problems and areas of concern. Five jurisdictions were selected: California, Florida, North Carolina, Puerto Rico, and the U.S. Virgin Islands. In each jurisdiction, we examine the cost and availability of home insurance, hazard mitigation efforts, regulatory actions, and state government insurance mechanisms. We conclude with an evaluation of policy options to increase the supply of insurance and better manage catastrophe risk. These options and their pros and cons are summarized in Box E.1.
{"title":"Natural Disasters and the Supply of Home Insurance","authors":"Martin Grace, R. Klein","doi":"10.2139/SSRN.816924","DOIUrl":"https://doi.org/10.2139/SSRN.816924","url":null,"abstract":"The purpose of this briefing paper is to assess the implications of natural disasters for the supply of home insurance. We focus on the risk of hurricanes and earthquakes. Our analysis begins with a review of the challenges that catastrophes pose for the insurance mechanism and how insurers seek to overcome these challenges. We then examine insurance market conditions in selected jurisdictions in the U.S. and identify problems and areas of concern. Five jurisdictions were selected: California, Florida, North Carolina, Puerto Rico, and the U.S. Virgin Islands. In each jurisdiction, we examine the cost and availability of home insurance, hazard mitigation efforts, regulatory actions, and state government insurance mechanisms. We conclude with an evaluation of policy options to increase the supply of insurance and better manage catastrophe risk. These options and their pros and cons are summarized in Box E.1.","PeriodicalId":168354,"journal":{"name":"Torts & Products Liability Law","volume":"94 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126252132","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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