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Applied and bridge studies study record
Environment, climate & resourcesLiability Too Late: A System Asset Pricing Model Analysis
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Reading βW
βW means annual system-welfare loss divided by annual industry revenue Π. Revenue is the denominator, never profit, earnings, or net income; ΔW and Π must use the same domain, same time period, and same activity boundary. See the βW methodology manual.
Contribution — what this adds to the conversation
Contributes a formal theorem and policy proposal grounded in the SAPM canon. The contribution is scholarly but relies heavily on internal framework concepts.
WHAT'S NEW · Original application of SAPM framework to critique ex-post liability, proposing ex-ante System Welfare Bonds. The βW calculation and the 'Liability Too Late' theorem are novel within the corpus.
The paper's argument is that oil and gas liability regimes like OPA 1990 are structurally incapable of preserving system welfare because they operate within a bilateral game that excludes ecological and climate systems. Using the Missing System Theory, it calculates a βW of 2.0 for the industry, meaning each dollar of revenue destroys $2 of system welfare. The paper proposes replacing ex-post liability caps with ex-ante System Welfare Bonds to internalize system costs before extraction begins.