IDEAS home Printed from https://ideas.repec.org/a/aea/aejpol/v14y2022i2p366-401.html
   My bibliography  Save this article

When Does Product Liability Risk Chill Innovation? Evidence from Medical Implants

Author

Listed:
  • Alberto Galasso
  • Hong Luo

Abstract

Liability laws designed to compensate for harms caused by defective products may also affect innovation. We examine this issue by exploiting a major quasi-exogenous increase in liability risk faced by US suppliers of polymers used to manufacture medical implants. Difference-in-difference analyses show that this surge in suppliers' liability risk had a large and negative impact on downstream innovation in medical implants, but it had no significant effect on upstream polymer patenting. Our findings suggest that liability risk can percolate throughout a vertical chain and may have a significant chilling effect on downstream innovation.

Suggested Citation

  • Alberto Galasso & Hong Luo, 2022. "When Does Product Liability Risk Chill Innovation? Evidence from Medical Implants," American Economic Journal: Economic Policy, American Economic Association, vol. 14(2), pages 366-401, May.
    • Handle: RePEc:aea:aejpol:v:14:y:2022:i:2:p:366-401
    DOI: 10.1257/pol.20190757
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/pol.20190757
    Download Restriction: no
    File URL: https://doi.org/10.3886/E142501V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/pol.20190757.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/pol.20190757.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/pol.20190757?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hermosilla, Manuel, 2024. "Regulating ethical experimentation: Impacts of the breakthrough therapy designation on drug R&D," Journal of Health Economics, Elsevier, vol. 94(C).
    2. Dawid, Herbert & Di, Xuan & Kort, Peter M. & Muehlheusser, Gerd, 2024. "Autonomous vehicles policy and safety investment: An equilibrium analysis with endogenous demand," Transportation Research Part B: Methodological, Elsevier, vol. 182(C).
    3. Schaufele, Brandon, 2022. "Chilling Effects from Anti-SLAPP Laws," MPRA Paper 113740, University Library of Munich, Germany.
    4. Augustine Denteh & D'esir'e K'edagni, 2022. "Misclassification in Difference-in-differences Models," Papers 2207.11890, arXiv.org, revised Jul 2022.
    5. Galasso, Alberto & Luo, Hong & Zhu, Brooklynn, 2023. "Laboratory safety and research productivity," Research Policy, Elsevier, vol. 52(8).

    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • L64 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Machinery; Business Equipment; Armaments
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:14:y:2022:i:2:p:366-401. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.