The benefits of extended liability
研究当监管者无法控制委托人与代理人之间的私人交易时，将委托人的责任延伸至环境风险事故，能否提高社会福利。
Abstract We consider the optimal regulation of an environmentally risky venture (the agent/seller) bound by contract to a stakeholder (the principal/buyer) under moral hazard on the level of safety care exerted by the agent. Extending the liability of the principal might improve social welfare when the regulator cannot control the private transactions linking the agent and his principal. We derive second- and third-best optimal regulations depending on the degree of incompleteness of the regulatory contract. As more of his wealth is at stake, the principal better internalizes the regulator’s objectives when he has full bargaining power in designing private transactions. Instead, when principals are competitive, exposing more of their wealth is of no value under pure moral hazard but still improves social welfare when private transactions take place under adverse selection. ∗We thank the French Ministry of Ecology and Sustainable Development for its financial support. We also thank for comments Denis Gromb and the participants in the Journées de Microéconomie Appliquée,