Optimal liability rules in the face of risks and technological choices of firms.

Summary The economic analysis of civil liability has developed around the idea that this legal tool can ex ante provide incentives to prevent accident risks. In the presence of large-scale technological risks, this literature has notably highlighted the inefficiencies of the limited liability regime. In an effort to protect investors in order to facilitate the inflow of capital necessary for the emergence of modern production activities, this regime may provide sub-optimal incentives to prevent a risk whose damage is not fully internalized. In Chapter 1, we review this literature and highlight the fact that a comparison with analyses conducted in environmental economics is necessary. Such a comparison, opening the analysis to the possibility of induced technological change, has been initiated in a framework of polluting emissions regulation. Our thesis will then show that such a rapprochement is desirable and will bring new results for the economic analysis of large-scale technological risk prevention. Chapter 2 shows that the possibility of technological change makes it possible to relativize the scope of the inefficiencies of limited liability. We highlight the fact that such a liability regime can lead firms to make technological changes that reduce the probability of accidents and better internalize the risk. In addition, the introduction of a tax based on the level of production reinforces the efficiency of this regime. Chapters 3 and 4 extend the analysis to the presence of imperfectly known risks, which may arise in the presence of new technologies. We compare limited and unlimited liability, and show that the latter provides more incentives to seek risk information while having the least impact on technology choice. Finally, Chapter 5 addresses the issue of innovation, when technical progress can change both the cost of prevention and the probability of accidents. We show that the type of innovation and the role of the Regulator are essential: the no-fault liability rule is always preferable to the negligence rule in the presence of a conformist Regulator, but the latter may be preferable in the presence of a proactive Regulator if the technical progress essentially modifies the prevention cost.