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Regulation of Product Safety Design through Product Testing

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Author Info
Marino, Anthony M

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Abstract

The indirect regulation of product safety design through pre-market testing is common with pharmaceuticals and other products containing chemical ingredients. We model this problem as a three stage game in which the firm begins by designing safety, next the government supervises a testing process, and finally the firm markets the product if it is approved. We characterize and compare the Nash and the two leadership equilibria of this game, analyze the comparative statics of these solutions, and consider the effects of regulatory misbehavior. We show that the effects of regulatory misbehavior depend crucially the type of firm-regulator interaction. Copyright 1995 by Kluwer Academic Publishers

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Publisher Info
Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 7 (1995)
Issue (Month): 3 (May)
Pages: 255-76
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Handle: RePEc:kap:regeco:v:7:y:1995:i:3:p:255-76

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Web page: http://www.springerlink.com/link.asp?id=100298

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  1. Stéphan Marette, 2007. "Minimum safety standard, consumers’ information and competition," Journal of Regulatory Economics, Springer, vol. 32(3), pages 259-285, December. [Downloadable!] (restricted)
  2. Marette, Stéphan, 2007. "Minimum Safety Standard, Consumers’ Information, and Competition (The)," Staff General Research Papers 12718, Iowa State University, Department of Economics. [Downloadable!]
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