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Risk-Mitigating Technologies: the Case of Radiation Diagnostic Devices

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  • Galasso, Alberto
  • Luo, Hong

Abstract

We study the impact of consumers' risk perception on firm innovation. Our analysis exploits a major surge in the perceived risk of radiation diagnostic devices, following extensive media coverage of a set of over-radiation accidents involving CT scanners in late 2009. Difference-in-differences regressions using data on patents and FDA product clearances show that the increased perception of radiation risk spurred the development of new technologies that mitigated such risk and led to a greater number of new products. We provide qualitative evidence and describe patterns of equipment usage and upgrade that are consistent with this mechanism. Our analysis suggests that changes in risk perception can be an important driver of innovation and shape the direction of technological progress.

Suggested Citation

  • Galasso, Alberto & Luo, Hong, 2019. "Risk-Mitigating Technologies: the Case of Radiation Diagnostic Devices," CEPR Discussion Papers 13682, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13682
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    1. Alberto Galasso & Hong Luo, 2021. "Risk-Mitigating Technologies: The Case of Radiation Diagnostic Devices," Management Science, INFORMS, vol. 67(5), pages 3022-3040, May.

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    More about this item

    Keywords

    Risk perception; Innovation; Medical devices; Product liabilities;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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