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Switching Consumers and Product Liability:On the Optimality of Incomplete Strict Liability

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2010

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Baumann, Florian
Grechenig, Kristoffel

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http://nbn-resolving.de/urn:nbn:de:bsz:352-opus-126013
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Zusammenfassung

This paper shows that it may be socially optimal to grant accident victims less than full compensation. In our framework, firms are liable under product liability but also invest in care to prevent consumers switching to competitors. Affecting the partition of consumers by means of care-taking is not desirable from a social standpoint. Consequently, it may be optimal to reduce liability below full compensation in order to adjust firms care incentives.

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Fachgebiet (DDC)
330 Wirtschaft

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Tort law, product liability, care level, asymmetric information, switching

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ISO 690BAUMANN, Florian, Tim FRIEHE, Kristoffel GRECHENIG, 2010. Switching Consumers and Product Liability:On the Optimality of Incomplete Strict Liability
BibTex
@techreport{Baumann2010Switc-3284,
  year={2010},
  title={Switching Consumers and Product Liability:On the Optimality of Incomplete Strict Liability},
  author={Baumann, Florian and Friehe, Tim and Grechenig, Kristoffel}
}
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