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October 13, 2008

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David Gilo

Daniel, thanks so much for your helpful comments. Here are a few short replies:
1. Strict liability of the injurer would solve the problem of insufficient activity and sub-optimal care by the injurer, but in cases where the victim's behavior too could affect harm, a contributory negligence regime is required, and then the problem of insufficient activity and sub-optimal care on the part of the victim arises. As we show, one of the legal implications of our finding is that the current literature's recommendations as to the choice between a negligence regime and a strict liability regime with contributory negligence may be flipped.

2. We don't propose to extend our idea to a party who is "inflicting" harm merely by an omission (such as a lawyer who had chosen not to be a doctor). As you mention, this could be justified, among other things, by the high administrative costs of locating such omissions.

3. Our analysis has implications for a party inflicting harm by an action, such as a polluting plant. Suppose that had the plant expanded its production by 50%, a very effective precaution would have become cost-justified. Our insight implies that such a plant may have to explain (e.g., to the environmental regulator) why it is not enhancing its activity level and taking the precaution, even if the precaution is not cost-justified given the plant's current level of production.
More comments and suggestions are welcome!

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