Risk Aversion, Liability Rules, and Safety

This paper investigates the performance of liability rules in two-party stochastic externality problems where negotiations are feasible and side payments are based on the realized level of externalities. Results show that an increase in polluter liability does not necessarily increase safety or efficiency in cases where the polluter is risk neutral. Complete polluter liability is found to yield Pareto optimality. When either party is risk averse, an increase in polluter liability may sometimes reduce safety and efficiency. If the polluter is risk neutral and the victim is risk averse, Pareto optimality is only achieved by assigning full liability on the polluter, i.e. giving the victim complete property rights to a clean environment. If the polluter is risk averse and the victim is risk neutral, no level of polluter liability is optimal. In this case, optimality can only be achieved through a contract on abatement activities, such that the risk-averse polluter receives a guaranteed payment regardless of the stochastic outcome.     

Normative Power and the Liberal Peace: A Rejoinder to John O'Brennan

This rejoinder to John O'Brennan reasserts the case that the EU enlargement process has a depoliticising effect, which weakens the connections between Western Balkan states and their societies. It suggests that O'Brennan's response is more apologia than analysis; evading issues raised by asymmetrical relations of power between the EU and Western Balkans states. Here the EU is idealised, with the ascribed status of a “normative actor” projecting power merely through “soft power” mechanisms. The points raised in rejoinder seek to clarify that the more “muscular” use of conditionality and direct management of policy reforms inevitably limit the possibilities for public and political debate and consensus-making. Moreover, they distance political elites from their societies. In particular, the use of political conditionality is highlighted, to demonstrate that whether “hard” powers of imposition or “soft” powers of conditionality are used matters less to those on the receiving end of external imposition than to the EU itself, which has attempted to distance itself from its use of executive powers in the region.     

Economic crises, capital transfer restrictions and investor protection under modern investment treaties

The first 150 words of the full text of this article appear below. Key points

• Capital liberalization was the norm of internationaleconomic relations until the Economic Depression of the 1930swhen exchange restrictions became an important instrument ofeconomic policy of many countries.
• The IMF Articles of Agreementwere the outcome of efforts by several countries to providean acceptable international legal framework that would minimizethe negative impact of exchange restrictions while at the sametime preserving the right of Member States to impose exchangerestrictions when faced with balance-of-payment problems.
• Thatposition is to a large extent maintained by most modern investmenttreaties although subject to heightened scrutiny by internationalarbitral tribunals under the disciplines of expropriation, nationaltreatment and fair and equitable treatment standards among othersin order to protect investors’ interests whilst safeguardinghost states, regulatory autonomy.