How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk: Reply

• Published in: The American economic review Vol. 91; no. 3; pp. 739 - 745
• Main Author: Pitchford, Rohan
• Format: Journal Article
• Language: English
• Published: Nashville American Economic Association 01.06.2001
• Subjects: Accidents; Bankruptcy; Bargaining; Bargaining power; Creditors; Debt contracts; Economic theory; Environmental impact; Environmental risk; Lender liability; Lenders; Limited liability; Shorter Papers; State of nature; Studies; Subsidies; United States > US

A reply to comments on the 1995 paper are presented. Both articles make important contributions to the understanding of creditor liability. Deep pockets are creditor bargaining power serve to mitigate the perverse effect of an increase in lender liability. However, when the firm has access to a rich...