Accident Law and Resource Allocation
Volume: Volume 5, No. 2
Issue: Autumn 1974
Pages: pp. 366-405
Authors: Peter A. Diamond
Title: Accident Law and Resource Allocation
Abstract: This article examines the effects from introducing a "frictionless" legal system into a model of competitive equilibrium with externalities. In a traditional negligence-contributory negligence legal system, there are two important legal parameters under "due care" standards. This paper relates the different equilibria which can occur to the levels of the "due care" standards.
JEL Classification
Welfare Theory General (0240)
Welfare Theory Externalities (0244)