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Characterization of Efficient Product Liability Rules: When Consumers are Imperfectly Informed

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  • Ram Singh

    (Delhi School of Economics)

Abstract

Product liability has acquired immense importance in the last 50 years. Various studies show that when consumers are imperfectly informed about the product related risk, the market mechanism will not lead to an efficient outcome and tort liability is required for economic efficiency. Many product-caused injuries are governed by liability rules. In this paper efficiency properties of the entire class of product liability rules when consumers are imperfectly informed about the product related risk are studied in a unified framework. A necessary and sufficient condition for efficiency of a product liability rule is derived. The analysis is carried out in a somewhat more general framework.

Suggested Citation

  • Ram Singh, 2002. "Characterization of Efficient Product Liability Rules: When Consumers are Imperfectly Informed," Working papers 110, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:110
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    More about this item

    Keywords

    Product Risk; total accident costs; efficient product liability rules; social benefits; negligent consumer's liability; imperfect information; Nash equilibrium.;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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