Joint Use of Liability and Regulation in Environmental Law

Abstract

In this paper, we argue that the joint use of ex-ante regulation and ex-post liability rules is efficient when there are uncertainty surrounding causal investigations and regulatory myopia. As these conditions are generally met in environmental cases, we provide an explanation for the frequent coexistence of these two instruments to control activities that create a risk for the environment. Moreover, we suggest that a joint use of liability and regulation should more frequently be optimal at the European (Federal) level than at the Country (State) level.

Keywords: Regulation, Liability, Joint Use, Precautionary Principle, Causal Uncertainty, Regulatory Myopia

JEL Classification: K13, K32, L50, Q52, Q58