A copy of this work was available on the public web and has been preserved in the Wayback Machine. The capture dates from 2010; you can also visit the original URL.
The file type is
Switching Consumers and Product Liability: On the Optimality of Incomplete Strict Liability
Social Science Research Network
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.doi:10.2139/ssrn.1532108 fatcat:mzmrsiawfnahxkvvsji6qzx3si