effect of joint and several liability under Superfund on brownfields
By: Howard F. Chang, Hilary Sigman.
Contributors: Sigman, Hilary, 1964-; National Bureau of Economic Research.
Series: NBER working paper series -- no. 11667.; Working paper series (National Bureau of Economic Research) -- working paper no. 11667.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 25
Subjects: Liability for environmental damages -- United States; Brownfields -- Prices -- United States
Description: "In response to claims that the threat of Superfund liability deters the acquisition of potentially contaminated sites or "brownfields" for redevelopment, the federal government and the states have enacted laws or adopted programs to protect purchasers from liability.  This protection may be unwarranted, however, if sellers can simply adjust the price of contaminated property downward to compensate buyers for the liabilities associated with the property.  We present a formal model of joint and several liability under Superfund that allows us to distinguish four different reasons that Superfund liability may discourage the purchase of contaminated property despite the tendency for land prices to reflect the expected transfer of liability to the buyer.  The previous literature has overlooked the four effects that we identify, which all arise because a sale may increase the number of defendants in a suit to recover cleanup costs.  First, a sale may increase the share of liability that a seller and a buyer may expect to pay as a group.  Second, a sale may increase the amount of damages that the government can expect to recover from the defendants at trial.  Third, a sale may increase the total litigation costs that a buyer and a seller may face as a group.  Fourth, game theory suggests that a sale may increase the amount that the government can expect to extract from defendants in a settlement"--National Bureau of Economic Research web site.
Notes: "September 2005."

Includes bibliographical references (p. 23-25).

Also available in PDF from the NBER world wide web site (www.nber.org).