Working Paper BETA #2020-25

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Title : Innovation, information, lobby and tort law under uncertainty

Author(s) : Julien Jacob, Caroline Orset

Abstract : Recent environmental policies favour the ’pollutant-payer’ Principle. This principle points out the pollutant financial liability for potential incidents induced by its activities. Investing in technological innovations generates uncertainty on the future returns, as well as on the damages that such innovations could involve and on the cost to reimburse in the event that of troubles. To reduce this uncertainty, the firm has the opportunity to acquire information, for example through research activities, on its project’s potential consequences on human health and the environment. Nevertheless, in their efforts to achieve and/or to maintain a marketing authorisation with the agency, firms may develop specific strategies to exploit scientific uncertainty. They may produce favourable scientific findings. In case of accident, the firm utilising this type of behaviour can be legally charged. We then analyse whether liability rules and tort law incentive the firm both to invest in research and development to reduce the uncertainty and to decrease miscommunication on the results.

Key-words : health and environmental risks, industrial risks, information acquisition, innovation, liability rules, lobby.

JEL Classification : D01, D72, K32, Q57.