Safety regulation and monitor liability - HEC Paris - École des hautes études commerciales de Paris Access content directly
Journal Articles Review of Economic Design Year : 2002

Safety regulation and monitor liability

Eberhard Feess
  • Function : Author


We propose a simple liability rule when several agents are jointly responsible for monitoring a risky economic activity or certifying its security. Examples are safety controls for drugs or technical systems, environmental liability, or air safety accidents. The agents have private knowledge of their monitoring or avoidance costs. We adopt a mechanism design approach to ensure optimal monitoring incentives. Our innovation is to focus on information that is available or can be proxied when harm has occurred and when typically regulators and/or courts deliberate over fines and damages. By contrast, earlier proposals require more estimations of hypothetical accident scenarios and their ex ante probabilities. We argue that our rule promises substantial savings in information costs for courts and regulators and excludes likely sources of errors.


Dates and versions

hal-00459892 , version 1 (25-02-2010)



Ulrich Hege, Eberhard Feess. Safety regulation and monitor liability. Review of Economic Design, 2002, Vol.7,n°2, pp.173-185. ⟨10.1007/s100580200075⟩. ⟨hal-00459892⟩


30 View
0 Download



Gmail Facebook X LinkedIn More