Arbeitspapier
Manufacturer Liability for Harms Caused by Consumers to Others
This paper investigates whether manufacturers should be liable if consumers, through the use of a product, cause harm to others. If consumers have deep pockets then consumeronly liability is socially desirable. With consumer insolvency, however, consumer-only liability leads to inadequate consumer precautions, inadequate safety features, and excessive economic activity. With homogeneous insolvent consumers, the best rule is "residual-manufacturer liability" where the consumer bears primary responsibility and the manufacturer bears the shortfall in damages. When consumers' willingness-to-pay is correlated with social harm they cause then residual-manufacturer liability distorts the market quantity. When consumers differ in their wealth then residual manufacturer liability creates an inefficient cross-subsidization and an overprovision of safety features. In both cases, consumer-only liability may be preferred to residual-manufacturer liability. Applications, including gun manufacturer liability, are discussed.
- Language
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Englisch
- Bibliographic citation
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Series: CSIO Working Paper ; No. 0042
- Classification
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Wirtschaft
- Subject
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Produkthaftung
Theorie
- Event
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Geistige Schöpfung
- (who)
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Hay, Bruce
Spier, Kathryn E.
- Event
-
Veröffentlichung
- (who)
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Northwestern University, Center for the Study of Industrial Organization (CSIO)
- (where)
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Evanston, IL
- (when)
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2004
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Hay, Bruce
- Spier, Kathryn E.
- Northwestern University, Center for the Study of Industrial Organization (CSIO)
Time of origin
- 2004
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