Economic Analysis of Products Liability: Theory
Andrew F. Daughety
Department of Economics, Vanderbilt University; Vanderbilt University - Law School
Jennifer F. Reinganum
Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Law School
May 11, 2011
RESEARCH HANDBOOK ON THE ECONOMICS OF TORTS, Jennifer H. Arlen, ed., Edward Elgar Ltd., Forthcoming
Vanderbilt Law and Economics Research Paper No. 11-29
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.
Number of Pages in PDF File: 49
Keywords: Products Liability, Safety, Contractual Liability, Strict Liability
JEL Classification: K13, L15, L13, D82
Date posted: May 12, 2011 ; Last revised: June 4, 2011
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