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Product liability when cumulative harm is incurred by both consumers and third parties

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  • Eric Langlais
  • Tim Friehe
  • Elisabeth Schulte

Abstract

Traditional law and economics analyses of product liability assume that expected harm is proportional to usage. This paper builds on Daughety and Reinganum (2013a, 2014) by assuming that harm increases and is convex in usage. In contrast to previous contributions, we analyze liability rules when not only consumers but also third parties incur harm. We show that the social ranking of liability rules previously established for the case in which only consumers suffer harm (strict liability dominates no liability and negligence)may be reversed if third party harm is sufficiently important.

Suggested Citation

  • Eric Langlais & Tim Friehe & Elisabeth Schulte, 2019. "Product liability when cumulative harm is incurred by both consumers and third parties," EconomiX Working Papers 2019-23, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2019-23
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    References listed on IDEAS

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    1. Andrew F. Daughety & Jennifer F. Reinganum, 2013. "Cumulative Harm, Products Liability, and Bilateral Care," American Law and Economics Review, American Law and Economics Association, vol. 15(2), pages 409-442.
    2. Andrew F. Daughety & Jennifer F. Reinganum, 2014. "Cumulative Harm and Resilient Liability Rules for Product Markets," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(2), pages 371-400.
    3. Watabe, Akihiro, 1999. "The effect of liability-sharing rules in delegating hazardous activities," International Review of Law and Economics, Elsevier, vol. 19(3), pages 349-368, September.
    4. Andrew F. Daughety & Jennifer F. Reinganum, 2006. "Markets, torts, and social inefficiency," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 300-323, June.
    5. Andrew F. Daughety & Jennifer F. Reinganum, 2013. "Economic analysis of products liability: Theory," Chapters, in: Jennifer H. Arlen (ed.), Research Handbook on the Economics of Torts, chapter 3, pages 69-96, Edward Elgar Publishing.
    6. Boyer, Marcel & Laffont, Jean-Jacques, 1997. "Environmental risks and bank liability," European Economic Review, Elsevier, vol. 41(8), pages 1427-1459, August.
    7. Mateus Dias & Rudi Rocha & Rodrigo R Soares, 2023. "Down the River: Glyphosate Use in Agriculture and Birth Outcomes of Surrounding Populations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(6), pages 2943-2981.
    8. Dias, Mateus & Rocha, Rudi & Soares, Rodrigo R., 2019. "Glyphosate Use in Agriculture and Birth Outcomes of Surrounding Populations," IZA Discussion Papers 12164, Institute of Labor Economics (IZA).
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    Cited by:

    1. Charreire, Maxime & Langlais, Eric, 2021. "Should environment be a concern for competition policy when firms face environmental liability?," International Review of Law and Economics, Elsevier, vol. 67(C).

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    More about this item

    Keywords

    Product liability; Cumulative harm; Environmental harm;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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