Working Paper No. 03-29:
Date Posted: 2003
Abstract (below) | Full text (most recent) on SSRN
Liability systems internalize negative externalities by providing general tort liability rules. According to such rules, those who cause harm to others should pay compensation. In theory, in the presence of positive externalities, negative liability should apply: those who produce benefits should be paid a compensatory award by the gainers. Nevertheless, current legal systems do not display such general negative liability rules. Rather, they tackle the problem of internalizing positive externalities by implementing a set of different and often indirect solutions. This article suggests an explanation for this puzzle, and furnishes indications for future comparative law research.