• Satish Kumar Jain


In the subdiscipline of law and economics, laws are analysed from the efficiency perspective. Economic analysis of liability rules, the subject matter of this monograph, has occupied a prominent place in law and economics right from its inception in the 1960s. The liability rules employed by courts, particularly negligence rule and strict liability, have been extensively analysed in the law and economics literature. In this monograph the totality of all liability rules are analysed from efficiency perspective. This chapter introduces the framework of analysis and the main results presented in the monograph. Among the results obtained in this text the most important are (1) the complete characterization of efficient liability rules when negligence is defined in terms of shortfall from the due care; (2) the complete characterization of efficient incremental liability rules when negligence is defined in terms of shortfall from the due care; (3) the theorem establishing that there is no liability rule which is efficient when negligence is defined in terms of cost-justified untaken precautions; and (4) the inconsistency of decoupled liability with efficiency. In view of these general results, it follows that for efficiency it is necessary that both parties to the interaction are made to internalize the entire harm due to interaction, that the rule must have the closure property with respect to the parties involved in the interaction giving rise to the externality, and that the rule must be immune from strategic manipulation.


Care Level Multiple Injurer Strict Liability Liability Rule Coase Theorem 
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Copyright information

© Springer India 2015

Authors and Affiliations

  • Satish Kumar Jain
    • 1
  1. 1.Centre for Economic Studies and PlanningJawaharlal Nehru UniversityNew DelhiIndia

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