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Automobile Air Bags in the 1990s: Market Failure or Market Efficiency?

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  • Mannering, Fred
  • Winston, Clifford

Abstract

This article seeks to explain the recent growth in the adoption of air bags in new automobiles. Our analysis focuses on market forces, that is, consumers' willingness to pay for air bags and automakers' responsiveness to consumers' willingness to pay. We find that air bags were offered by automakers because consumers were willing to pay for them--increasingly willing as information about actual experiences with air bags spread through the media and friends. Thus, in general, the market for air bags worked efficiently. Doubt has again been placed on the potential social value of automobile safety regulation and the efficacy of nonexperimental safety information campaigns. Copyright 1995 by the University of Chicago.

Suggested Citation

  • Mannering, Fred & Winston, Clifford, 1995. "Automobile Air Bags in the 1990s: Market Failure or Market Efficiency?," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 265-279, October.
    • Handle: RePEc:ucp:jlawec:v:38:y:1995:i:2:p:265-79
    DOI: 10.1086/467332
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    Cited by:

    1. Mannering, Fred & Winston, Clifford & Starkey, William, 2002. "An exploratory analysis of automobile leasing by US households," Journal of Urban Economics, Elsevier, vol. 52(1), pages 154-176, July.
    2. John E. Calfee & Clifford Winston & Randolph Stempski, 2002. "Direct-to-Consumer Advertising and the Demand for Cholesterol-Reducing Drugs," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 673-690.
    3. Donald N. Dewees, 2016. "Are Automated Vehicles Coming at the Right Speed?," Working Papers tecipa-564, University of Toronto, Department of Economics.
    4. Parry, Ian W. H., 2004. "Comparing alternative policies to reduce traffic accidents," Journal of Urban Economics, Elsevier, vol. 56(2), pages 346-368, September.
    5. David W. Harless & George E. Hoffer, 2003. "Testing for Offsetting Behavior and Adverse Recruitment Among Drivers of Airbag‐Equipped Vehicles," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 70(4), pages 629-650, December.
    6. Max Harleman & Pramod Manohar & Elaine L. Hill, 2022. "Negotiations of Oil and Gas Auxiliary Lease Clauses: Evidence from Pennsylvania’s Marcellus Shale," NBER Working Papers 30806, National Bureau of Economic Research, Inc.
    7. Small, Kenneth A., 1997. "Economics and urban transportation policy in the United States," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 671-691, November.
    8. Small, Kenneth A., 1997. "Economics and Urban Transportation Policy in the United States," University of California Transportation Center, Working Papers qt7mz1326k, University of California Transportation Center.
    9. Clifford Winston, 2008. "The Efficacy of Information Policy: A Review of Archon Fung, Mary Graham, and David Weil's Full Disclosure: The Perils and Promise of Transparency," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 704-717, September.

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