Liability Sharing and the Role of Insurance for Environmental Accidents

Abstract

A lot of accidents that cause environmental pollution have happened in recent years, then the public concern with compensation problems for environmental damage has been growing greatly. To solve these problems, many laws and conventions (rules) have been established until now. However, these rules would not be enough to cover all of compensation problems. Because there are various types of firms that cause accident, but these rules are not designed dependent on firm's type. So these rules should be improved hereafter. Therefore, to solve the problem as stated above, we consider an economic activity that involves transportation of environmentally hazardous materials like oil, and then we assume that there are one firm that needs to transport materials and two types of transporters : One is good transporter, and the other is vicious. Under these circumstances we discuss the problem that whether extended liability is effective or not. Namely, the purpose of this paper is to investigate the impact of extended liability rule (liability sharing rule) and rule that adopted in the real world (insurance and fund) and to compare the two rules. © 2005, JAPAN SECTION OF THE REGIONAL SCIENCE ASSOCIATION INTERNATIONAL. All rights reserved.