• Ranita Nagar

The doctrine of the market exchange system is not limited to the exchanges concerned with profit maximisation rather the maximisation of any positive value and to limit the exchange of any value deteriorating outcome and in the process creation of surplus i.e. surplus maximization. This principle is applied to an understanding on the liability system in law to bring forth the understanding of efficient internalization of a social harm. To understand this the paper differentiates between efficient and inefficient market exchange as both an ex ante and ex poste mechanism of surplus maximization and applies the same to the liability systems as ordained in law. Further the differentiation of the two systems, ie, market exchange system and liability system is explained in terms of voluntariness and involuntariness, in order to highlight the mechanisms required for efficient internalization of costs. The paper also differentiates between the public goods nature of liability system from the private good nature of the market mechanism to develop insights for an efficient liability system drawn from the application of an efficient market mechanism.

market exchange system, the liability system, ex ante ex post mechanism, social goods private goods, voluntary and involuntary exchange

"The overarching principle of Market: Its interface with Law", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.6, Issue 6, page no.451-456, June-2019, Available :http://www.jetir.org/papers/JETIR1905N67.pdf

"The overarching principle of Market: Its interface with Law", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.6, Issue 6, page no. pp451-456, June-2019, Available at : http://www.jetir.org/papers/JETIR1905N67.pdf