A method of allocating damages and the economic efficiency - A method of allocating damages among firms on (2nd) HIV legal composition from the economic analysis of joint tort -

Abstract

In this paper, we analyze how strict market share liability works within the condition of the joint tort. We find that each firm is likely to choose the care which is lower than the socially optimal care along with the output which is smaller than the socially optimal output because of this rule. We also find that the method of allocating damages among firms on (2nd)HIV legal composition leads the same result.

In addition to strict market share liability, this paper presents three alternative liability rules;( 1) the rule that depends on both levels of cares and outputs of firms;(2)the rule that requires no levels of cares or outputs;(3)the rule that depends on only the levels of cares. We find that two rules–(1) and(2)–have more capability of increasing social welfare than strict market share liability.

However, it should be kept in mind that the administration cost of the rule(1)is the highest of these rules and each firm will still have to bear the damages excessively in use of the rule (2).