The efficiency analysis of liability rules when there are multiple injurers or victims

What is it about?

It is shown that: (i) When there are one victim and multiple injurers, the condition of collective negligence liability is sufficient for efficiency. A liability rule defined for one victim and multiple injurers satisfies the condition of collective negligence liability if and only if its structure is such that whenever some individuals are negligent, no non-negligent individual bears any loss in case of occurrence of accident. (ii) Unlike the case of one victim and multiple injurers, in the case of multiple victims and one injurer, it turns out that there is no liability rule which is efficient.

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Why is it important?

Most of the economic analysis of liability rules has been concerned with the case of one victim and one injurer. As most harmful interactions involve more than one victim or more than one injurer or both, the efficiency analysis of this work is clearly of considerable relevance.