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Strict Product Liability And Safety: Evidence From The General Aviation Market

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  • RANDY A. NELSON
  • JAMES N. DREWS

Abstract

This paper examines the impact of a strict product liability standard on the accident rate in the general aviation (GA) industry. Liability expenses increased by 775% between 1976 and 1986, reducing the sales of new GA aircraft by 90% and increasing the age of the GA fleet. Using both aggregate and model‐specific data, our results indicate that the increase in the age of the GA fleet increased the accident rate by 25%–35% during 1981–2000. In addition, the higher price of GA aircraft boosted sales of homebuilt planes, which have higher accident and fatality rates than GA aircraft. (JEL K13, L62, L15)

Suggested Citation

  • Randy A. Nelson & James N. Drews, 2008. "Strict Product Liability And Safety: Evidence From The General Aviation Market," Economic Inquiry, Western Economic Association International, vol. 46(3), pages 425-437, July.
    • Handle: RePEc:bla:ecinqu:v:46:y:2008:i:3:p:425-437
    DOI: 10.1111/j.1465-7295.2007.00098.x
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    References listed on IDEAS

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    1. George L. Priest, 1991. "The Modern Expansion of Tort Liability: Its Sources, Its Effects, and Its Reform," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 31-50, Summer.
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    Cited by:

    1. Sobieralski, Joseph B., 2013. "The cost of general aviation accidents in the United States," Transportation Research Part A: Policy and Practice, Elsevier, vol. 47(C), pages 19-27.
    2. Oster, Clinton V. & Strong, John S. & Zorn, C. Kurt, 2013. "Analyzing aviation safety: Problems, challenges, opportunities," Research in Transportation Economics, Elsevier, vol. 43(1), pages 148-164.

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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
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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