This article investigates the effects of government liability limits on the maintenance
of interstate highways. It is found that the quality of highway maintenance varies
from state to state in a manner that is related to the degree and nature of government
liability for roadway conditions in each state. On the one hand, states that waive
sovereign immunity and do not expressly prohibit punitive damages in judgments
against the state tend to have roads of higher quality. However, states that waive
sovereign immunity and do not specify a maximum dollar amount to limit liability
tend to have roads of lower quality.
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