Advanced Search
MyIDEAS: Login

The Economics of Product Safety

Contents:

Author Info

  • Walter Y. Oi

Abstract

The report of the National Commission on Product Safety stated that the American public is being exposed to many unreasonably hazardous products. Further, the post-accident remedies to compensate victims of product-related accidents are inadequate and encourage the continued production of unsafe products. It is believed that a shift in assignment of liability for accident costs from consumers to sellers would discourage sales of the more hazardous product grades thereby reducing the frequency and severity of home accidents. This conclusion cannot be derived from economic theory. Indeed, under fairly plausible conditions, a shift to producer liability can lead to the increased production of riskier product grades. The theory developed in this paper argues that the demand for a risky product is determined by the full price consisting of the price of the parent risky good plus the imputed expected damage costs. The consumer maximizes utility by demanding that product grade which minimizes his full price. In the concluding section of the paper, attention is directed to the welfare implications of the policy alternatives for the product safety problem.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://links.jstor.org/sici?sici=0005-8556%28197321%294%3A1%3C3%3ATEOPS%3E2.0.CO%3B2-A&origin=repec
File Function: full text
Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 4 (1973)
Issue (Month): 1 (Spring)
Pages: 3-28

as in new window
Handle: RePEc:rje:bellje:v:4:y:1973:i:spring:p:3-28

Contact details of provider:
Web page: http://www.rje.org

Order Information:
Web: https://editorialexpress.com/cgi-bin/rje_online.cgi

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Dinopoulos, Elias & Livanis, Grigorios T. & West, Carol Taylor, 2005. "How Cool is C.O.O.L.?," Working Papers 15658, University of Florida, International Agricultural Trade and Policy Center.
  2. Ram Singh, 2008. "Risk, Informational Asymmetry and Product Liability: An Enquiry into Conflicting Objectives," Working Papers id:1466, eSocialSciences.
  3. Hoffmann, Sandra A. & Hanemann, W. Michael, 2005. "Torts and the protection of 'legally recognized interests'," CUDARE Working Paper Series 1025, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  4. Ram Singh, 2002. "Characterization of Efficient Product Liability Rules: When Consumers are Imperfectly Informed," Working papers 110, Centre for Development Economics, Delhi School of Economics.
  5. Simone Clemhout, 1974. "Assessment of consumer research for a valuation of a quality-of-life policy," Social Indicators Research, Springer, vol. 1(3), pages 329-357, December.
  6. Baniak Andrzej & Grajzl Peter, 2013. "Equilibrium and Welfare in a Model of Torts with Industry Reputation Effects," Review of Law & Economics, De Gruyter, vol. 9(2), pages 265-302, October.
  7. Boom, Anette, 1998. "Product risk sharing by warranties in a monopoly market with risk-averse consumers," Journal of Economic Behavior & Organization, Elsevier, vol. 33(2), pages 241-257, January.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:rje:bellje:v:4:y:1973:i:spring:p:3-28. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.