Citation

Discussion Paper Details

Please find the details for DP13036 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: How does product liability risk affect innovation? Evidence from medical implants

Author(s): Alberto Galasso and Hong Luo

Publication Date: July 2018

Keyword(s): Innovation, medical devices, product liability, tort and vertical foreclosure

Programme Area(s): Industrial Organization and Public Economics

Abstract: Liability laws designed to compensate for harms caused by defective products may also affect innovation incentives. This paper examines this issue, exploiting a major quasi-exogenous increase in liability risk faced by US suppliers of polymers used to manufacture medical devices implanted in human bodies. Difference-in-differences analyses suggest that the surge in liability risk had a large and negative impact on downstream innovation in medical implants but no significant effect on upstream polymer patenting. These findings show how tort laws may affect the development of new technologies and how liability risk may percolate through an industry's vertical chain.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13036

Bibliographic Reference

Galasso, A and Luo, H. 2018. 'How does product liability risk affect innovation? Evidence from medical implants'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13036