Strict Liability as a Deterrent in Toxic Waste Management: Empirical Evidence from Accident and Spill Data

This paper examines whether strict liability imposed on polluters has reduced uncontrolled releases of toxics into the environment. We fit regressions relating spills of selected chemicals to the type of liability in force in a state and to state manufacturing activity. For some chemicals, spills are more numerous in states imposing strict liability. This could be due to unobserved state characteristics, with small firms being responsible for a disproportionate number of spills, regardless of the liability structure. Alternatively, separate regressions for the two liability regimes suggest that only under strict liability are small firms responsible for a disproportionate number of spills