This chapter analyses from an economic perspective the conditions for state responsibility in international law which define what types of conduct attributable to a state engage international responsibility. By drawing on insights from the economic analysis of liability rules in domestic tort and contract law, it provides an overview of different responsibility standards and their incentive structures. The focus lies on the implications of the concept of objective responsibility in international law with breach of an international obligation being the core element. Since state responsibility is based on illegality, non-compliance depends essentially on the primary obligation in question. Hence, their design and content (if they are reflecting different responsibility standards such as due diligence) are key to achieve optimal incentives for compliance. This chapter also explores the concept of liability for lawful acts, that is obligations of compensation for harm resulting from hazardous activities not prohibited by international law. It outlines that in constellations, where a balance needs to be struck between risky but economically beneficial activities and potential transboundary harm or harm to the global commons, responsibility for breach of primary due diligence obligations should be complemented with liability rules as an alternative cost allocation mechanism.