Producer Liability and Competition Policy When Firms Are Bound by a Common Industry Reputation

Autor:	Andrzej Baniak, A. Joseph Guse, Peter Grajzl
Rok vydání:	2014
Předmět:	Economics and Econometrics media_common.quotation_subject Economics Econometrics and Finance (miscellaneous) Liability Social Welfare Microeconomics Oligopoly Product (business) Market structure Market economy Incentive Economics Damages Business Reputation media_common
Zdroj:	The B.E. Journal of Economic Analysis & Policy. 14:1645-1676
ISSN:	1935-1682 2194-6108
DOI:	10.1515/bejeap-2013-0168
Popis:	We contrast the laissez-faire regime with the regime of strict producer liability and draw the implications for competition policy in a setting where oligopolistic firms cannot differentiate themselves from rivals but rather are bound by a common industry reputation for product safety. We show that, first, unlike in the traditional products liability model, firms’ incentives to invest in precaution depend on market structure. Second, depending on the magnitude of expected damages awarded by the courts, laissez-faire can welfare dominate strict producer liability. Third, the relationship between social welfare and industry size, and hence the role for competition policy, depends on the institutional regime governing the industry. Under some circumstances, restricting industry size is unambiguously welfare-enhancing.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::82a20ee30d57cab92ee0a354be6b2e8e https://doi.org/10.1515/bejeap-2013-0168 Zobrazit plný text záznamu Plný text ve formátu PDF