Of the Relationship of Markets and Command in the Liability Rule
Of the Relationship of Markets and Command in the Liability Rule
This chapter explores the relationship between markets and command within the context of the liability rule. It considers how the liability rule is actually employed in the legal world, and in particular in torts and eminent domain. It shows that the liability rule is sometimes used to approach what a free market would do were such a market feasible, and that there are many occasions when use of the liability rule reflects very different aims. It discusses the actual operation of the liability rule as prices, penalties, and assessments in place of a market, a command, and for reasons having to do with its own ideological desirability, respectively. It also explains why liability-rule charges sometimes look like prices, sometimes like penalties, and sometimes like assessments.
Keywords: markets, command, liability rule, torts, eminent domain, free market, prices, penalties, assessments
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