IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/doi10.1086-694337.html
   My bibliography  Save this article

Tort Reform and Innovation

Author

Listed:
  • Alberto Galasso
  • Hong Luo

Abstract

Current academic and policy debates focus on the impact of tort reforms on physicians' behavior and medical costs. This paper examines whether these reforms also affect incentives to develop new technologies. We develop a theoretical model that predicts that the impact of reducing liability risks for physicians on innovation may be positive or negative, depending on the characteristics of the technology. Empirically, we find that, on average, laws that limit the liability exposure of health care providers are associated with a significant reduction in medical device patenting. Tort reforms have the strongest impact in medical fields in which the probability of facing a malpractice claim is the largest, and they do not seem to affect the number of new technologies of the highest and lowest quality. Our results underscore the importance of considering dynamic effects in the economic analysis of tort laws.

Suggested Citation

  • Alberto Galasso & Hong Luo, 2017. "Tort Reform and Innovation," Journal of Law and Economics, University of Chicago Press, vol. 60(3), pages 385-412.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/694337
    DOI: 10.1086/694337
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/694337
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/694337
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/694337?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Emeric Henry & Marco Loseto & Marco Ottaviani, 2022. "Regulation with Experimentation: Ex Ante Approval, Ex Post Withdrawal, and Liability," Management Science, INFORMS, vol. 68(7), pages 5330-5347, July.
    2. Galasso, Alberto & Luo, Hong, 2018. "How does product liability risk affect innovation? Evidence from medical implants," CEPR Discussion Papers 13036, C.E.P.R. Discussion Papers.
    3. Alberto Galasso & Hong Luo, 2021. "Risk-Mitigating Technologies: The Case of Radiation Diagnostic Devices," Management Science, INFORMS, vol. 67(5), pages 3022-3040, May.
    4. Na-Eun Cho & Yue Maggie Zhou, 2021. "Profits, Reputation, and the Risk of Medical Malpractice Liability," Strategy Science, INFORMS, vol. 6(3), pages 228-243, September.
    5. Herbert Dawid & Gerd Muehlheusser, 2019. "Smart products: liability, timing of market introduction, and investments in product safety," CESifo Working Paper Series 7673, CESifo.
    6. Alberto Galasso & Hong Luo, 2018. "When does Product Liability Risk Chill Innovation? Evidence from Medical Implants," NBER Working Papers 25068, National Bureau of Economic Research, Inc.
    7. Galasso, Alberto & Luo, Hong, 2019. "Risk-Mitigating Technologies: the Case of Radiation Diagnostic Devices," CEPR Discussion Papers 13682, C.E.P.R. Discussion Papers.
    8. Elissa P. Gentry & Benjamin J. McMichael, 2020. "Responses to Liability Immunization: Evidence from Medical Devices," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 17(4), pages 789-819, December.
    9. Dove John A. & Dove Laura R., 2020. "US State Tort Liability Reform and Entrepreneurship," Review of Law & Economics, De Gruyter, vol. 16(3), pages 1-45, November.
    10. Mitja Kovac & Salvini Datta & Rok Spruk, 2021. "Pharmaceutical Product Liability, Litigation Regimes, and the Propensity to Patent: An Empirical Firm-Level Investigation," SAGE Open, , vol. 11(2), pages 21582440211, April.
    11. Dawid, Herbert & Muehlheusser, Gerd, 2022. "Smart products: Liability, investments in product safety, and the timing of market introduction," Journal of Economic Dynamics and Control, Elsevier, vol. 134(C).
    12. Matthew Grennan & Charu Gupta & Mara Lederman, 2018. "Firm Scope and Spillovers from New Product Innovation: Evidence from Medical Devices," NBER Working Papers 25183, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:doi:10.1086/694337. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.