> even though they might be technically liable, they'd never actually have to pay, assuming you don't have a law requiring them to carry commercial insurance
Um, I had assumed that "liable" meant "liable", not "technically liable but not actually liable". We're not comparing scenarios where the law is the same but we arbitrarily shift the "liable" label from one party to another. We're comparing scenarios where:
(a) the law says the company is legally liable when any driver they contract hits someone while driving a passenger under that contract, and has to carry insurance accordingly, vs.
(b) the law says the driver is legally liable when they hit someone, and has to carry insurance accordingly--commercial insurance for when they're carrying passengers under contract, and ordinary insurance for when they're driving for personal reasons.
The Coasian point is simply that under legal regime (b), as compared to (a), the drivers will negotiate for higher wages or other additional compensation to offset the increased cost of their insurance.
> If you do have such a law, then we're not talking about anything Coasian--we have just picked the driver to carry the cost of accidents.
Sigh. This is just case (b) above, and the Coasian point about the comparison with case (a) does apply.
Um, I had assumed that "liable" meant "liable", not "technically liable but not actually liable". We're not comparing scenarios where the law is the same but we arbitrarily shift the "liable" label from one party to another. We're comparing scenarios where:
(a) the law says the company is legally liable when any driver they contract hits someone while driving a passenger under that contract, and has to carry insurance accordingly, vs.
(b) the law says the driver is legally liable when they hit someone, and has to carry insurance accordingly--commercial insurance for when they're carrying passengers under contract, and ordinary insurance for when they're driving for personal reasons.
The Coasian point is simply that under legal regime (b), as compared to (a), the drivers will negotiate for higher wages or other additional compensation to offset the increased cost of their insurance.
> If you do have such a law, then we're not talking about anything Coasian--we have just picked the driver to carry the cost of accidents.
Sigh. This is just case (b) above, and the Coasian point about the comparison with case (a) does apply.