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Strategic R&D Investment Under Liability Law

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  • Alfred Endres
  • Tim Friehe

Abstract

This paper analyzes the incentives of duopolists to invest in advanced care technology under liability law. We establish that investment incentives under strict liability are in line with the taxonomy of Fudenberg and Tirole (1984), whereas the investment incentives under negligence most likely are not. Indeed, investment incentives under negligence are dependent on the timing of the policy maker’s regulations, whether or not due care is firm specific, and whether or not precautionary measures are durable .

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File URL: http://hdl.handle.net/10.1080/13571516.2012.715270
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Journal of the Economics of Business.

Volume (Year): 19 (2012)
Issue (Month): 3 (November)
Pages: 359-376

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Handle: RePEc:taf:ijecbs:v:19:y:2012:i:3:p:359-376

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Cited by:
  1. Baumann, Florian & Friehe, Tim, 2012. "Optimal damages multipliers in oligopolistic markets," DICE Discussion Papers 80, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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