Strict liability, scarce generic input and duopoly competition

Strict liability imposed on firms involved in an imperfect competition game (here duopoly) is not an obstacle to achieving a socially optimal care level of care. However, when one input becomes scarce (here a limited generic asset), the precedent result is compromised. Duopolistic competition leads to supply more goods at a lower price at the equilibrium, but also a lower care level compared to a monopoly placed in similar conditions. When damage are too high, capped strict liability coupled with an ex-ante regulation leads the firms to increase their care level. The weakest one may disappear letting the other one in monopoly situation.