Bilateral accidents

Accidents in which care levels of both firms and customers affect damages are called bilateral accidents. Strict liability with contributory negligence will efficiently manage risks in bilateral accidents if customers are aware of the courts due-care standard. Under strict liability with contributory negligence, consumers must engage in precautions that the court determines are cost-effective. The damages that remain after that level of care is taken are the firm s responsibility. This increases product prices and reduces purchases, an important method of accident control (Shavell 1987, 54). 

The theory can be divided into two distinct types. The first is the economics of bilateral accidents. These are accidents where the probability of an accident is influenced by the level of preventive effort undertaken by both the railroad and the other party involved in the accident. The prime examples of bilateral accidents are grade-crossing collisions, trespasser fatalities, and occupational injuries. Because the highway user, trespasser, or employee can affect the probability and severity of an accident by the level of care that they take, economic and legal theory has developed to provide all parties the correct incentives so as to minimize the societal cost of accidents. The theory of bilateral accidents is described in chapter 7, and then is applied to grade crossings, trespassers and occupational safety in chapters 8, 9 and 10 respectively. 

The first example, shown in table 7.1, concerns a bilateral accident between the railroad and Party A. Each party can choose either to take no care to avoid an accident or to take care. The effort of taking care imposes a cost of five on the party taking care. The probability of an accident occurring varies between 0.06 and 0.16 depending on the level of care taken by either or both parties. The more care... 

The branch of law that deals with compensation in connection with bilateral accidents is called torts. Torts are legal actions taken by a plaintiff vfho has suffered harm to recover damages from a defendant. In some cases both parties... 

If the liability laws work as they should, both parties to bilateral accidents will be given the correct incentives to take the level of care that minimizes total societal cost. However, there are possible failures in the legal system that may lead to incorrect incentives. 

The existence of well-functioning liability process does not eliminate the concern about bilateral accidents. After all, more than ninety percent of railroad fatalities and the vast majority of injuries occur in bilateral accidents. The sad fact is that even with the correct economic incentives, many parties to bilateral accidents take much less care than they should. 

A model of bilateral accidents can be constructed to compare the two systems of compensation. In estimating the model, data are available on the costs of workplace accidents, and the legal and administrative fees associated with the two systems of compensation. One can also make some reasonable inferences on how the probability of an accidents varies with the amount of care taken by both parties. What is generally unknown is the costs that both parties incur in taking care. 

The preceding information is incorporated into a bilateral accidents model shown in table 10.2. The model represents the expected costs of workplace accidents for a typical railroad worker in a given year. There are two changes from the model used in earlier chapters. The first one separates the injury costs to employees into costs associated with medical expenses and lost wages, and those due to pain and suffering. The second is the addition of the legal and administrative costs of adjudicating claims. 

Table 10.2 Bilateral Accidents Model of Worker s Compensation (WC) versus FELA... 

Marx here makes the very same error that ]. Pen has criticized in connection with the last-mentioned problem, that of dividing the benefits from cooperation. Pen observes that if a situation such as bilateral monopoly i indeterminate according to one particular model, this does not mean that the situation is indeterminate in itself Indeed, the last notion is devoid of sense, at least outside quantum mechanics. In the social sciences we never encounter phenomena that are accidental in an absolute sense, only theory-relative accidents. 

Finally, since ICAO safety audit reports and accident reports reflect that in many instances safety is compromised in States which do not adhere to ICAO Standards and Recommended practices, making it a critical issue. States should collectively recognize the worth of adhering to ICAO policy and also recognize Article 83 bis as a bilateral tool to be used in the instances described therein. 

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