Question

1. Why is deterrence needed for intentional torts (where punitive damages are awarded) rather than negligent torts?

2. Why are costs imposed on others without their consent problematic for a market economy

Answer 1

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2.
The market economy is based upon demand and supply with minimum government intervention. Here, the demand created by the people will be fed by the supply created by the firms. Thus, pricing strategy will be applied by the firms in the wake of demand for their products. If demand is more, the price will be high and consumers will pay willfully. When, demand is less and supply is more, the price will come down. Thus, whoever will have market power, will rule the market. Here, no any cost is applied to anyone without their consent. Every cost is based upon the demand and supply and people willfully pay for it. It is also the primary reason that negative externality is not imposed on market economy because market demand and supply will automatically take care of it.

Imposing it upon someone will disturb the market oriented mechanism of the economy. Under tort laws provisions, damages to someone due to the action of another will be taken care off in the form of damage claims. Thus, no externality or cost needs to be applied in a market based economy as it will interfere with the market based economy.