Economic Analysis of Products Liability: Theory

RESEARCH HANDBOOK ON THE ECONOMICS OF TORTS, Jennifer H. Arlen, ed., Edward Elgar Ltd., Forthcoming

Vanderbilt Law and Economics Research Paper No. 11-29

49 Pages Posted: 12 May 2011 Last revised: 4 Jun 2011

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

Date Written: May 11, 2011

Abstract

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.

Keywords: Products Liability, Safety, Contractual Liability, Strict Liability

JEL Classification: K13, L15, L13, D82

Suggested Citation

Daughety, Andrew F. and Reinganum, Jennifer F., Economic Analysis of Products Liability: Theory (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. Available at SSRN: https://ssrn.com/abstract=1838540 or http://dx.doi.org/10.2139/ssrn.1838540

Andrew F. Daughety (Contact Author)

Department of Economics, Vanderbilt University ( email )

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HOME PAGE: http://my.vanderbilt.edu/andrewdaughety/

Vanderbilt University - Law School

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Jennifer F. Reinganum

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
615-322-2937 (Phone)
615-343-8495 (Fax)

Vanderbilt University - Law School

131 21st Avenue South
Nashville, TN 37203-1181
United States

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