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Economic Analysis of Products Liability: Theory

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  • Andrew F. Daughety

    ()
    (Department of Economics, Vanderbilt University)

  • Jennifer F. Reinganum

    ()
    (Department of Economics, Vanderbilt University)

Abstract

This chapter provides a survey of much of the recent theoretical analysis of products liability. We start by describing an idealized model and providing the specific economic assumptions which underpin it. Later sections examine the effects of relaxing these assumptions, which has been the focus of much of the theoretical work over the last few decades. These modifications include: informational differences between producers and consumers that arise over the life of a product; incorporation of endogenously-determined costs, such as those that arise from investment in care; and evaluating contractual versus mandatory liability.

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File URL: http://www.accessecon.com/pubs/VUECON/vu11-w07.pdf
File Function: First version, June 2011
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 1107.

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Date of creation: Jun 2011
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Handle: RePEc:van:wpaper:1107

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: Products Liability; Safety; Contractural Liability; Strict Liability;

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  1. Steven Matthews & Andrew Postlewaite, 1985. "Quality Testing and Disclosure," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 328-340, Autumn.
  2. Andrew F. Daughety & Jennifer F. Reinganum, 2008. "Products Liability, Signaling and Disclosure," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(1), pages 106-126, March.
  3. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, December.
  4. Daughety, Andrew F & Reinganum, Jennifer F, 1995. "Product Safety: Liability, R&D, and Signaling," American Economic Review, American Economic Association, vol. 85(5), pages 1187-1206, December.
  5. Craswell, Richard & Calfee, John E, 1986. "Deterrence and Uncertain Legal Standards," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 279-303, Fall.
  6. Marino, Anthony M, 1997. "A Model of Product Recalls with Asymmetric Information," Journal of Regulatory Economics, Springer, vol. 12(3), pages 245-65, November.
  7. Janssen, Maarten C.W. & Roy, Santanu, 2010. "Signaling quality through prices in an oligopoly," Games and Economic Behavior, Elsevier, vol. 68(1), pages 192-207, January.
  8. Doughety, Andrew F & Reinganum, Jennifer F, 1997. "Everybody Out of the Pool: Products Liability, Punitive Damages, and Competition," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(2), pages 410-32, October.
  9. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
  10. Andrew F. Daughety & Jennifer F. Reinganum, 2008. "Communicating quality: a unified model of disclosure and signalling," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 973-989.
  11. Steven Shavell, 1994. "Acquisition and Disclosure of Information Prior to Sale," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 20-36, Spring.
  12. Nancy A. Lutz, 1989. "Warranties as Signals under Consumer Moral Hazard," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 239-255, Summer.
  13. Welling, L., 1990. "A Theory of Voluntary Recalls and Product Liability," Papers 125, Calgary - Department of Economics.
  14. Schwartz, Alan & Wilde, Louis L., 1983. "Imperfect Information in Markets for Contract Terms: The Examples of Warranties and Security Interests," Working Papers 480, California Institute of Technology, Division of the Humanities and Social Sciences.
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