Liability limits: lessons from the BP oil spill

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One year ago, the BP Deepwater Horizon drilling rig exploded, killing 11 crew members and sending more than four million barrels of oil into the Gulf of Mexico. Although drilling in the Gulf’s deep waters is resuming, the law limiting oil companies’ liability for the damage they cause has yet to be changed. Until lawmakers eliminate the liability cap, oil companies will lack full incentives to prevent future disasters, and will be ill-equipped to deal with them should they occur. Continue reading

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Encouraging Pollution: The Perils of Liability Limits

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The authors of this research paper examine the rationales for and the effects of laws that cap liability for environmental disasters, such as oil spills and nuclear accidents. Such laws, they conclude, subsidize environmentally harmful activities and encourage risky behaviour. Continue reading