The impact of court errors on liability sharing and safety regulation for environmental/industrial accidents

▶ We model court errors effect on optimal liability sharing of firms and financiers. ▶ Numerical simulations are about court efficiency in avoiding Type I and II errors. ▶ Increasing the court efficiency in avoiding errors raises safety care level. ▶ There is a reduction in the probability of accident. ▶ Lower liability share and standard of care for firms can be imposed by government.