
doi: 10.1086/596197
handle: 11245/1.318039
Negative and positive externalities pose symmetrical problems to social welfare. The lawinternalizes negative externalities by providing general tort liability rules. According to suchrules, those who cause harm to others should pay compensation. In theory, in the presenceof positive externalities, negative liability should apply: those who produce benefits shouldbe paid a compensatory award by the gainers. Nevertheless, the legal system does not displaysuch general negative-liability rules. Rather, it tackles the problem of internalizing positiveexternalities by implementing a set of different and often indirect solutions. My explanationfor this asymmetry in legal remedies rests on three features of a negative-liability regime,relating to intent, incentives, and evidence. These features explain the scope and design ofrestitution rules, liability for nonfeasance, and other mechanisms for the internalization ofpositive externalities.
340, 330, Law
340, 330, Law
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