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The Economics of Product Safety: A Rejoinder

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  • Walter Y. Oi

Abstract

The model of the demand for a risky product (in the Spring 1973 issue of this Journal) has been criticized because it assumed perfect information. Goldberg contends that the implications of that model are wholly irrelevant for a world of imperfectly informed consumers. He further asserts that the model is incapable of relaxing the full information assumption. In this rejoinder, I first restate the salient features of the earlier model. The minimization of the sum of accident costs and accident prevention costs is surely the appropriate goal for public policy toward product safety, but this goal is largely ignored in Goldberg's comment. Contrary to his assertion, I show my model can easily be modified to analyze the implications of imperfect information within the context of product risks that can be described by one parameter. Some remarks are also offered on the costs and benefits of product bans as well as on directions for further research.

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  • Walter Y. Oi, 1974. "The Economics of Product Safety: A Rejoinder," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 689-695, Autumn.
    • Handle: RePEc:rje:bellje:v:5:y:1974:i:autumn:p:689-695
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    Cited by:

    1. Leathers, Howard D., 1979. "A Primer On Nutrition Policy In The United States," Staff Papers 13268, University of Minnesota, Department of Applied Economics.
    2. Tsvetanov, Tsvetan & Miceli, Thomas J. & Segerson, Kathleen, 2021. "Products liability with temptation bias," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 76-93.
    3. Virginia Hernanz & Luis Toharia, 2006. "Do Temporary Contracts Increase Work Accidents? A Microeconometric Comparison between Italy and Spain," LABOUR, CEIS, vol. 20(3), pages 475-504, September.
    4. Carlos García-Serrano & Virginia Hernanz & Luis Toharia, 2010. "Mind the Gap, Please! The Effect of Temporary Help Agencies on the Consequences of Work Accidents," Journal of Labor Research, Springer, vol. 31(2), pages 162-182, June.
    5. Kjell Hausken, 2013. "Exchange of goods while investing into production and safety," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 23(1), pages 29-35.
    6. John P. Speir, 1995. "The Implications of Different Liability Rules for The Provision of A Risky Public Good," Public Finance Review, , vol. 23(3), pages 399-416, July.

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