Consider a potential accident between the driver of a car and a train at a railroad...
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Consider a potential accident between the driver of a car and a train at a railroad crossing where the railroad is the injurer and the driver is the victim. The railroad can take precaution by slowing down its trains and by properly maintaining and inspecting its equipment at the crossing. The driver can take precaution by stopping and looking/listening for a train before proceeding to cross the tracks. The costs of these precautions and resulting damages are in the table below: RR: no care, Car: no care RR: care, Car: no care RR: no care, Car: care RR: care, Car: care RR Cost 0 3000 0 3000 Car Cost 0 0 1000 1000 Total Damages 10000 8000 7000 5000 a. What will the outcome be if the liability rule is strict liability? Explain. b. Is strict liability efficient? Explain why or suggest a liability rule that will result in an efficient outcome. Consider a potential accident between the driver of a car and a train at a railroad crossing where the railroad is the injurer and the driver is the victim. The railroad can take precaution by slowing down its trains and by properly maintaining and inspecting its equipment at the crossing. The driver can take precaution by stopping and looking/listening for a train before proceeding to cross the tracks. The costs of these precautions and resulting damages are in the table below: RR: no care, Car: no care RR: care, Car: no care RR: no care, Car: care RR: care, Car: care RR Cost 0 3000 0 3000 Car Cost 0 0 1000 1000 Total Damages 10000 8000 7000 5000 a. What will the outcome be if the liability rule is strict liability? Explain. b. Is strict liability efficient? Explain why or suggest a liability rule that will result in an efficient outcome.
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a On the basis of the strict liability rule the particular party of entity that would be held responsible for the fault or injury in the accident In t... View the full answer
Related Book For
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins
Posted Date:
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