Economic Analysis of liability and Regulation in Addressing Environmental Damages.

The main idea of this paper is to explore different legal instruments in addressing environmental pollution. Given that from the public interest theory, traditional instruments such as tort and liability rules are not sufficient to control environmental damages, we need some forms of government regulation. However, the need for government intervention does not deny the role of private solutions in preventing environmental harms. Therefore, the question arises how liability rules and regulation can jointly deploy to mitigate the environmental risks and how they influence each other? Finally, it should be asked that which of liability rules is more efficient for internalizing environmental externalities.