An Economic Analysis of Severe Industrial Hazards

ISBN-13: 9783790806786 / Angielski / Miękka / 1993 / 272 str.

Immo Querner

Opis

This study is concerned with the economics of potentially fatal industrial incidents. It describes the microeconomic representation of the relevant risk-preference patterns and assesses the impact on welfare of industrial facilities that constitute a severe health hazard.

Spis treści

Nomenclature.- Nomenclature.- A: A General Model of aversion Against Severe Industrial Hazards.- I. ‘Unlikeliness’ of Physical Risks.- 1. The Expected Utility Approach.- 1.1. Basics.- 1.2. Assumptions.- 1.3. Properties.- 1.4. Comparison to ‘Bernoulliism’.- 2. Criticism of the Expected Utility Approach.- 2.1. Basic Experimental Evidence.- 2.1.1. The Common Consequence Effect (Allais’ Paradox I).- 2.1.2. The Common Ratio Effect (Allais’ Paradox II).- 2.1.3. The Reflection Effect.- 2.2. From Clinical Common- to Physical Certainty-Effects.- 2.2.1. From Clinical Common- to Financial Certainty- Effects.- 2.2.2. From Financial- to Physical Certainty Effects.- 3. Vindicating EUA: Is There Really a Need to be Afraid of Russian Roulette?.- 3.1. Term Life Insurance Market.- 3.1.1. Supply of Life Insurance.- 3.1.2. Demand for Life Insurance.- 3.2. Safety-Improvements.- 3.2.1. Is Physical Safety a Normal Good?.- 3.2.2. Is Physical Safety a Drug?.- 3.3. Smith and Desvousges Re-visited.- Appendix 1 to chapter A.I.- Appendix 2 to chapter A.I.- Appendix 3 to chapter A.I.- Appendix 4 to chapter A.I.- II. ‘Catastrophiness’ of Physical Risks.- 1. Basic Definitions.- 1.1. A First Definition of ‘Catastrophiness.- 1.2. A Definition of ‘Publicness’.- 1.3. ‘Catastrophiness’ vs. ‘Publicness’.- 2. A Generalized State-Dependent Utility Framework.- 2.1. Formalizing Heir-Dependent Bequest Utilities.- 2.2. Maximizing Heir-Dependent Bequest Utilities.- 2.2.1. A ‘Lerner’-Testament.- 2.2.2. A ‘Constant Bequest Ratio’-Testament.- 2.3. ‘Catastrophe Aversion’.- 3. Living in the Presence of Catastrophic Hazards.- 3.1. Life-insurance Arrangements.- 3.1.1. The Supply of Life-insurance.- 3.1.2. The Demand for Life-insurance.- 3.2. Catastrophe-Reductions.- 3.2.1. Who Would Pay How Much for Catastrophe- Reductions?.- 3.2.2. Is Catastrophe-Reduction a Normal Good?.- 3.2.3. Is Catastrophe-Reduction a Drug?.- Appendix 1 to chapter A. II.- Appendix 2 to chapter A. II.- III. Likeliness vs. Catastrophiness of Physical Risks.- IV. A Liability Insurer’s Risk Evaluation.- 1. The Basics.- 2. The Liability Insurer’s vs. the Testator’s Risk Evaluation.- Appendix 1 to chapter A. IV.- Appendix 2 to chapter A. IV.- B: A Micro-Economic Analysis of Measures Against Severe Industrial Hazards.- I. Risk Evaluation for a ‘Reference Model’ of Industrial Hazards.- 1. The ‘Reference Model’.- 1.1. A General Lexian Framework.- 1.2. A Dichotomous Lexian Model.- 2. Individual Risk Evaluation.- 2.1. The Marginal Rate of Substitution Between ? and ?.- 2.2. The Marginal Option Price for Changes of ?.- 2.3. The Marginal Option Price for ?.- 2.4. Interdependencies of the Marginal Option Prices.- 3. A Liability Insurer’s Risk Evaluation.- Appendix 1 to chapter B.I.- Appendix 2 to chapter B.I.- II. Aggregation of Individual Risk/Consumption Preference Patterns.- 1. Arriving at a Society-Wide (Marginal) Option Price under Uncertainty: The General Case.- 2. Arriving at a Society-Wide (Marginal) Option Price under Uncertainty: The Dichotomous Lexian Model.- III. Aggregate Risk-Reduction Cost.- IV. Optimal Provision of Physical Safety.- V. Market Solutions, Failures and Corrections.- 1. The ‘Free Market’-System.- 2. Ex Ante Safety Regulations.- 3. Strict Liability.- 3.1. Strict Liability with Compulsory Liability-Insurance.- 3.2. Strict Liability with Regulated Compulsory Liability-Insurance.- 3.2.1. Insurance-Premia Ceiling.- 3.2.2. Corrective Insurance Taxes.- 3.2.3. A Risk-Reduction Cost Subsidy.- 3.2.4. Simultaneous Employment of Risk-Reduction Subsidies and Corrective Taxes.- 3.2.5. Corrective Compensation Standards.- 3.2.6. Regulation of Risk-Pooling.- 3.2.7. A Simultaneous Employment of Premium Ceiling, Corrective Taxes/Risk- Reduction Subsidies and Corrective Compensation Standards/Risk-Pooling Regulation.- 3.3. Strict Liability with Optional Liability-Insurance.- 3.4. Many Hazardous Facilities.- 3.4.1. The Insurance Market.- 3.4.2. The Operators.- Appendix 1 to chapter B.V.- Conclusion.- References.