Corporate Behavior and the Social Efficiency of Tort Law
This article examines this dissonance between accepted theory and observed reality, between what the model envisions and what the tort system seems to deliver. After sketching the model in greater detail, the first section of the article reviews restraints within tort law on the achievement of efficient outcomes. The analysis then turns to the broader legal environment, and describes how legally sanctioned means of liability evasion – such as the corporate law doctrine of limited liability and the bankruptcy rules permitting discharge of obligations – may further undermine the practical utility of the social efficiency model of tort. The final section of the article examines tort reform’s potential for overcoming such barriers to efficiency, and, in light of its pessimistic conclusion, suggests that rethinking the efficiency norm may be a more appropriate response.