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Risk-Mitigating Technologies: the Case of Radiation Diagnostic Devices

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  • Alberto Galasso
  • Hong Luo

Abstract

We study the impact of consumers’ risk perception on firm innovation. Our analysis exploits a major surge in the perceived risk of radiation diagnostic devices, following extensive media coverage of a set of over-radiation accidents involving CT scanners in late 2009. Difference-in-differences regressions using data on patents and FDA product clearances show that the increased perception of radiation risk spurred the development of new technologies that mitigated such risk and led to a greater number of new products. We provide qualitative evidence and describe patterns of equipment usage and upgrade that are consistent with this mechanism. Our analysis suggests that changes in risk perception can be an important driver of innovation and can shape the direction of technological progress.

Suggested Citation

  • Alberto Galasso & Hong Luo, 2019. "Risk-Mitigating Technologies: the Case of Radiation Diagnostic Devices," NBER Working Papers 26305, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26305
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    References listed on IDEAS

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    1. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
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    1. Alberto Galasso & Hong Luo, 2021. "Risk-Mitigating Technologies: The Case of Radiation Diagnostic Devices," Management Science, INFORMS, vol. 67(5), pages 3022-3040, May.

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    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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