Punitive Damages and the Optimal Level of Product Failure
AbstractFor several years a battle has been waged between trial lawyers and American business regarding the issue of punitive damage awards. Given the staggering magnitude of the monetary penalties that modern juries often impose against defendant firms, as well as the potential damage to the reputation of the company, how far should a supplier go in terms of efforts to improve product performance and reduce safety risks? We present a simple model that may be used as a framework for determining the optimal level of product safety/failure.
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Bibliographic InfoArticle provided by Missouri Valley Economic Association in its journal The Journal of Economics.
Volume (Year): 28 (2002)
Issue (Month): 1 ()
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
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