Question

What does it mean for a polluter to be liable for harm caused by his emissions? What does it mean for him notto be liable for harm caused by his emissions? From Coase’s perspective, what difference does it make for the economic efficiency of the outcome whether the existing law in a locality makes polluters liable or not liablefor harm caused by their emissions?

( Please type it,thanks)

Answer 1

The word liable means to be responsible for something by law or legally.

If a polluter is liable for the harm caused by the emissions produced by him. It means that he is legally responsible for the harms which are caused by his emmissions and he must give answers to it or if there is a loss to environment or to any one due to his emmissions than he needs to pay for it.

If a polluter is not liable for the harms caused by his emissions, it means that he is not legally responsible for the harms caused by the emissions produced by him and therefore no legal actions can be taken against him.

The Coase Theorem argues that under the right conditions parties to a dispute over property rights will be able to negotiate an economically optimal solution, regardless of the initial distribution of the property rights.

So this theorem can also be used in this situation as here also there is dispute over the rights that whether the polluter is responsible for the harms caused by his emissions or not. So here also that option must be choosen which increases the economic efficiency.

If the existing law in a locality makes him liable, than he has to pay for the harm and hence he will incur a large cost which may make his firm economically inefficient.

If the law do not make him liable, than also its cost has to be bore by the society and it will lead to economic inefficiency.

So in order to reach an economic efficient situation the law must make him responsible but should ask for half compensation and half must be provided by the government, than there will be no loss to anyone and the higher economic efficiency can ba reached.