Hazardous waste treatment decisions under alternative liability rules

Hazardous waste problems can pose great dangers to society, and they often confound reasonable attempts to allocate responsibility for them. Traditional principles of common law hold that extremely hazardous activities resulting in indivisible harm warrant the application of strict and joint and several liability. Consonant with these principles and with a prevailing notion that polluters should pay for correction of the harms they cause, Congress and the courts have tended to favor strict and joint and several liability in hazardous waste cases. The incentives or disincentives this and other forms of liability create for firms' waste management decisions are presently the subject of intense debate.; This dissertation offers a theoretical economic model for exploring how variations in the policy of assigning liability for the costs of cleaning up hazardous waste sites can affect the waste treatment decisions of private firms. The results indicate that strict liability is a very imprecise policy tool--one in which policy adjustments have potentially erratic effects, and one that is likely to make it especially difficult for the government to encourage firms to treat their wastes in the manner that is currently required. For firms whose treatment behavior is well documented or can otherwise be determined reasonably accurately, a negligence rule is found to provide a more precise policy tool that enables the government to encourage compliance with current treatment requirements at reduced enforcement effort and for more stringent levels of those requirements.; The imposition of joint and several liability magnifies the uncertainty regarding treatment outcomes by causing firms to react to their beliefs about each other's treatment behavior. Under negligence, this is likely to work in favor of the regulator interested in encouraging compliance; under strict liability, it is likely to make the regulator's job more difficult. This study therefore finds that, within a spectrum of liability policies, the combination of strict and joint and several liability gives regulators the least power to effectively and predictably influence the waste treatment decisions of private firms.