Strict Product Liability and Safety: Evidence from the General Aviation Market

Economic Inquiry, Vol. 46, Issue 3, pp. 425-437, July 2008

13 Pages Posted: 8 Sep 2008

See all articles by Randy A. Nelson

Randy A. Nelson

Colby College - Department of Economics

James N. Drews

affiliation not provided to SSRN

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 Classification: K13, L62, L15

Suggested Citation

Nelson, Randy Alan and DREWS, JAMES N., Strict Product Liability and Safety: Evidence from the General Aviation Market. Economic Inquiry, Vol. 46, Issue 3, pp. 425-437, July 2008, Available at SSRN: https://ssrn.com/abstract=1263080 or http://dx.doi.org/10.1111/j.1465-7295.2007.00098.x

Randy Alan Nelson

Colby College - Department of Economics ( email )

Waterville, ME 04901
United States
207-872-3567 (Phone)
207-872-3263 (Fax)

JAMES N. DREWS

affiliation not provided to SSRN

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