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Uncertain product risk, information acquisition, and product liability
We describe how product liability interacts with regulatory product approval in influencing a firm’s incentives to acquire information about product risk, using a very parsimonious model. The firm may have in- sufficient information acquisition incentives when it is not fully liable for the harm...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 19-2017) |
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| Main Authors: | , |
| Format: | Article |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2017
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | We describe how product liability interacts with regulatory product
approval in influencing a firm’s incentives to acquire information about
product risk, using a very parsimonious model. The firm may have in-
sufficient information acquisition incentives when it is not fully liable
for the harm caused by its product. The firm may also have excessive
information acquisition incentives under both full and limited liability.
We highlight efficiency inducing liability rules. |
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| Physical Description: | 16 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0500 |