Paul Burrows

The Impact of Fairness on Bargaining Behaviour

A number of bargaining experiments have raised the possibility that individuals’ notions of what is fair or just may be sufficiently powerful to generate behaviour which departs substantially and systematically from the predictions of standard bargaining models. This paper reports an experiment designed to test whether the relative impact of different notions of fairness varies with certain changes in the bargaining environment.

Combining Regulation and Legal Liability for the Control of External Costs

Considering the widespread coexistence, in developed countries, of both regulatory and legal liability instruments for the control of environmental and products-related external costs, it is surprising that there have been so few economic analyses of the simultaneous use of the two instruments. More effort has gone into exploring the relative merits of regulation and legal liability as alternatives. But any attempt to establish the general theoretical superiority, in efficiency terms, of either of the instruments over the other is doomed to failure. The reason is that the advantages of each of the instruments are context specific: In some contexts one of the instruments would dominate, in others the other one would do so. Consequently, one of the instruments can be “shown” to dominate the other only by using a model with very specific assumptions. This paper explores the simultaneous use of regulation and liability under different assumptions about how the two instruments are administered. First, in Section II it will be assumed that a regulated standard of precaution (care) and a negligence liability rule are implemented independently of each other. We will refer to this as the case of independent instruments, although it will become apparent that the consequences of the two instruments are not necessarily independent of each other, even in this case. Second, in Section III it will instead be assumed that the two instruments are characterized (as they are in practice) by a degree of evidentiary interdependence. This will be referred to as the case of interdependent instruments. Unsurprisingly, the consequences of the instruments will prove to be interdependent in this case as well. The exploration

The impact of fairness on bargainin

A number of bargaining experiments have raised the of what is fair or just may be sufficiently powerful to generate bel and systematically from the predictions of standard bargaining experiment designed to test whether the relative impact of different certain changes in the bargaining environment.

Nonconvexity induced by external costs on production: Theoretical curio or policy dilemma?

This paper considers, with a degree of scepticism, the sweeping policy conclusions that can be found in the theoretical literature concerning nonconvexit ies in the social production set induced by external costs on firms.’ This literature has provided proofs of the possibility that such nonconvexit ies exist, but these proofs have readily been interpreted as a basis on which to judge the advisability of policies to control external costs.2 Indeed, a number of authors have felt able to proceed from specific theoretical examples of the existence of nonconvexity to the opinion that nonconvexity represents a general obstacle to policy. One of the ma in themes will be to demonstrate that the theoretical possibility of the existence of a nonconvexity at a m icro level does not imply the existence of a m icro(or, a fortiori, macro-) nonconvexity in the real world. Nor does it imply that any nonconvexity that does exist in reality is relevant to policy. The intention is not to deny that nonconvexit ies may represent an obstacle to the efficient control of external costs in specific contexts. But in order to establish the real world policy relevance of a nonconvexity, it is necessary to verify its existence emp irically and to establish that it stands in a particular relationship to the no-policy starting point.

Controlling the monopolistic polluter: Nihilism or eclecticism?

Abstract This paper is concerned with the consequences of pollution control when the polluter is a monopolist who can choose between abating pollution by reducing output and by adopting a less-polluting technology. It is suggested that the risk of welfare losses resulting from control policy is lower when technology is flexible than when it is rigid. Nevertheless some risk does remain, so the paper concludes with a discussion of the possible use of selective control instruments to keep the risk to a minimum.

Pollution control with variable production processes

Abstract This paper compares the input and output effects of pricing and regulation instruments for pollution control. It is shown that a pricing policy could have adverse output effects which should be weighed in the balance against its abatement-cost-minimisation advantage over regulation. It is also demonstrated that pricing need not lead polluters to select known processes which are less polluting than those chosen under regulation.

A Deferential Role for Efficiency Theory in Analysing Causation-Based Tort Law

This paper argues for a reorientation in our thinking concerning the relationship between causation and efficiency in the design of tort law. The main proposition is that efficiency theory has a significant but deferential role to play in understanding appropriate tort law rules in countries where a corrective justice purpose is fundamental to the tort system.

Getting a stranglehold with the eminent domain clause

Professor Epstein has provided us with a lawyer’s interpretation of the role of the state in a capitalist society. It is his intention to develop a systematic analysis of “the proper relationship between the individual and the state” (p. 3).’ What in fact emerges is a largely normative analysis of the factors that would determine the distribution of wealth in a society that satisfied Epstein’s specification of the entitlements of the individual. These entitlements relate to an individual’s autonomy, which is stated to be indispensable to the social order (p. viii), but they are moderated by “the frictions of everyday life” (p. ix). Epstein sees the eminent domain clause (which requires the state to compensate those who lose assets taken for public use) as the buttress of the protection of people’s entitlements against encroachment by the state. His argument combines individual entitlements based on first-possession with a broad interpretation of the eminent domain clause, to establish a pervasive obstacle to the state taking of private property without equivalent compensation. The thrust of the argument is that the need to protect individual entitlements, which are independent of the state, compels one to the conclusion that the pursuit of redistribution objectives by the government is illegitimate. Professor Epstein’s elegant and intricate analysis may, perhaps, be judged on two levels. We can treat it as an intellectual exercise and check for the internal consistency of the argument. And we can try to reach ajudgment on the plausibility of his ideal society as a guide for the development of the modern mixed economy. In the discussion that follows, each of these two elements plays a part, and the thrust of the argument is that Epstein’s chain of argument has some important missing links and that it is his oversimplification of the desirable objectives of a good society that explains his repeated support for an emasculated state and his sustained hostility toward benevolent and caring government. The analysis presented here will use a high level of abstraction. This may be justified as an attempt to come to grips with the underlying structure of Epstein’s argument. What it inevitably fails to convey is the richness of the content of the book concerning the U.S. legal practice, in areas such as tort, regulation, and taxation, which will be apparent anyway on a first reading. The subject matter to

Operational dumping and the pollution of the sea by oil: An evaluation of preventive measures☆

Abstract The recent dispute over the impact of economic growth on the environment relative to the (predicted) physical limits imposed by the ecological system hinges on the role of pollution-preventive technology. This paper attempts a cost-effectiveness evaluation of alternative methods of preventing the largest source of marine oil pollution. The first major result of the analysis is that the technology which minimizes internal costs (and is favored by the oil companies) does not minimize the social costs of pollution prevention. The second is that relative to the price of oil the cost of pollution-prevention processes is very small indeed.

Contract discipline: In search of principles in the control of contracting power

The justness and the efficiency of contracts will depend on the effectiveness of contract discipline. This disciplin will be most effective when contractors have a good range of alternatives to choose from and when they ca make those choices on the basis of good information about the alternatives. This notion of contract disciplin is used in this paper as the basis for reviewing the coherence and effectivenss of judicial attempts to control con tracting behavior in the United Kingdom. It is suggested that the legal analysis of contract needs to be reorientate toward an exploration of the sources of contract indiscipline in the many highly imperfect markets in the real world