Limiting Limited Liability
- Author(s): Giuseppe Dari-Mattiacci
- Date Posted: 2005
- Law & Economics #: 05-32
- Availability: Full text (most recent) on SSRN
Limited liability may result in inefficient accident prevention, because a relevant portion of the expected harm is externalized on victims. This paper shows that under some restrictive conditions further limiting liability by means of a liability cap can improve caretaking.