IDEAS home Printed from https://ideas.repec.org/a/rje/bellje/v12y1981ispringp171-184.html
   My bibliography  Save this article

Imperfect Information, Costly Litigation, and Product Quality

Author

Listed:
  • Marilyn J. Simon

Abstract

This article examines the effect of costly litigation and imperfect information on the quality of output. An equilibrium is described in which consumers are uncertain about the result of a lawsuit. The findings show that for a wide range of due care standards there will be both negligent and nonnegligent firms in the market. Furthermore, as the population becomes more risk averse the proportion of output produced by negligent firms increases. If absolute risk aversion decreases as income increases, and there is market segmentation, reliance on litigation to control product quality will have undesirable distributional effects.

Suggested Citation

  • Marilyn J. Simon, 1981. "Imperfect Information, Costly Litigation, and Product Quality," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 171-184, Spring.
    • Handle: RePEc:rje:bellje:v:12:y:1981:i:spring:p:171-184
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

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


    Cited by:

    1. Daughety, Andrew F & Reinganum, Jennifer F, 1995. "Product Safety: Liability, R&D, and Signaling," American Economic Review, American Economic Association, vol. 85(5), pages 1187-1206, December.
    2. Tonja Jacobi, 2009. "The Role of Politics and Economics in Explaining Variation in Litigation Rates in the U.S. States," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 205-233, January.
    3. Coleff, Joaquín, 2011. "Product reliability, consumers’ complaints and market performance: the case of consumers’ associations," UC3M Working papers. Economics we1121, Universidad Carlos III de Madrid. Departamento de Economía.
    4. Ram Singh, 2002. "Characterization of Efficient Product Liability Rules: When Consumers are Imperfectly Informed," Working papers 110, Centre for Development Economics, Delhi School of Economics.
    5. Ram Singh, 2009. "RISK, INFORMATIONAL ASYMMETRY AND PRODUCT LIABILITY: An Enquiry Into Conflicting Objectives," Pacific Economic Review, Wiley Blackwell, vol. 14(1), pages 89-112, February.
    6. Ralf Ewert & Eberhard Feess & Martin Nell, 2000. "Auditor liability rules under imperfect information and costly litigation: the welfare-increasing effect of liability insurance," European Accounting Review, Taylor & Francis Journals, vol. 9(3), pages 371-385.
    7. Yongmin Chen & Xinyu Hua, 2017. "Competition, Product Safety, and Product Liability," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(2), pages 237-267.
    8. Joaquín Coleff, 2020. "Can consumer complaints reduce product reliability? Should we worry?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(1), pages 74-96, January.
    9. Yongmin Chen & Xinyu Hua, 2012. "Ex Ante Investment, Ex Post Remedies, And Product Liability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(3), pages 845-866, August.
    10. A. Mitchell Polinsky & Daniel L. Rubinfeld, 1986. "The Welfare Implications of Costly Litigation in the Theory of Liability," NBER Working Papers 1834, National Bureau of Economic Research, Inc.

    More about this item

    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:rje:bellje:v:12:y:1981:i:spring:p:171-184. 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: the person in charge (email available below). General contact details of provider: https://www.rje.org .

    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.