WELFARE IMPLICATIONS OF COSTLY
LITIGATION UNDER STRICT LIABILITY


Keith N. Hylton

Boston University School of Law Working Paper 99-13

Abstract

This paper examines a model of strict liability with costly litigation, and presents the conditions under which: (1) potential injurers take optimal precautions, (2) increasing litigation costs enhance precaution and social welfare, (3) the optimal level of liability exceeds the compensatory level, and (4) increasing the rate of settlement increases social welfare. The results have implications for controversies surrounding optimal damage awards (e.g., punitive versus compensatory), fee shifting, and the desirability of settlement.

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Keith N. Hylton Contact Information

knhylton@bu.edu
Boston University School of Law
765 Commonwealth Ave
Boston, MA 02215
USA
(617) 353-8959

Presentation and Publication Information:

This paper is a substantial revision of an earlier paper titled Welfare Implications of Strict Liability with Costly Litigation.

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