Optimal Liability for Libel
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Oren Bar-Gill
Although courts justify the constitutional law of libel with consequential reasoning, the true consequences of liability for harmful speech have never been fully explored. We construct an analytical framework for studying libel law, emphasizing both the positive and negative externalities generated by the publication of information. Our model highlights two distinct decisions that a publisher faces, the verification decision and the publication decision. We first demonstrate that a single damage measure for publication of false libelous information, such as the “damages equal harm” measure, cannot simultaneously induce socially optimal decisions regarding verification and publication. We then argue that the damage measure should depend on the efficacy of the verification process. Interestingly, when verification is reasonably effective, the damage award should be set equal to the social benefit from truthful publication. Our analysis provides a theoretical foundation for important elements of current libel law. It also suggests practicable avenues for reform.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Optimal Liability for Libel
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- Cigarette Demand, Structural Change, and Advertising Bans: International Evidence, 1970-1995
- Piracy and the Legitimate Demand for Recorded Music
- Oligopoly Deregulation and the Taxation of Commodities
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Articles in the same Issue
- Contributions Article
- Suggested Subsidies are Sub-optimal Unless Combined with an Output Tax
- War or Peace
- Selective Information Provision and Special Interest Influence: The Case of Trade Policy
- Price Discrimination via Proprietary Aftermarkets
- The Spite Motive and Equilibrium Behavior in Auctions
- Optimal Liability for Libel
- Aggregation of Non Stationary Demand Systems
- The Savings Impact of College Financial Aid
- A Theory of Utilization Review
- Cigarette Demand, Structural Change, and Advertising Bans: International Evidence, 1970-1995
- Piracy and the Legitimate Demand for Recorded Music
- Oligopoly Deregulation and the Taxation of Commodities
- Forming Voting Blocs and Coalitions as a Prisoner's Dilemma: A Possible Theoretical Explanation for Political Instability
- Ethnicity and Networks in African Trade
- Endogenous Preferential Trade Agreements: An Empirical Analysis
