| There is a trend at both the national and state levels towards incentive-based environmental policies, with liability rules representing one means of inducing firms to consider the social costs of their behavior. This is particularly evident in the federal Superfund program, as well as in states' own mirror programs, which are moving towards standards of strict liability and joint and several liability. The cost of cleaning up existing hazardous waste sites has made the adoption of appropriate policies to limit the contamination of future sites a priority of environmental management agencies.; Chapter 1 addresses the incentive effects of strict liability. A theoretical model is developed to demonstrate that a negligence rule may, in some cases, create stronger incentives to exercise care than does strict liability. To address the empirical question of strict liability's effect, I rely on firm-level data from 1989-1993, drawn from the EPA's Toxics Release Inventory. Regression results provide consistent evidence, even when controlling for the endogeneity of the liability standard, that strict liability is associated with an increase in hazardous waste generation.; In Chapter 2, I examine the distortionary and deterrent effects of joint and several liability, whereby any one defendant can be held liable for the entire damages in multidefendant cases. I find some evidence that firms with high asset levels respond to joint and several liability by reducing the quantity of waste transfered off-site for treatment or disposal. This is possibly part of an effort to prevent their waste from commingling with waste from other sources.; Chapter 3 examines the multi-jurisdictional issue of interstate shipments of hazardous waste for disposal, and how they are affected by states' varying liability rules. Regression estimates indicate that strict liability in nearby states is correlated with increases in hazardous waste generation in the home state. I also present evidence that firms in states with joint and several liability transfer greater quantities of waste out-of-state than do firms in states with a proportional liability standard. |
