Research Handbook on the Economics of Torts
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Research Handbook on the Economics of Torts

Edited by Jennifer H. Arlen

This pioneering Handbook contains specially-commissioned chapters on tort law from leading experts in the field. This volume evaluates issues of vital importance to those seeking to understand and reform the tort law and the litigation process, taking a multi-disciplinary approach, including theoretical economic analysis, empirical analysis, socio-economic analysis, and behavioral analysis. Topics discussed include products liability, medical malpractice, causation, proximate cause, joint and several liability, class actions, mass torts, vicarious liability, settlement, damage rules, juries, tort reform, and potential alternatives to the tort system. Scholars, students, legal practitioners, regulators, and judges with an interest in tort law, litigation, damages, and reform will find this seminal Handbook an invaluable addition to their libraries.
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Chapter 3: Economic analysis of products liability: Theory

Andrew F. Daughety and Jennifer F. Reinganum


This chapter provides a survey of much of the recent theoretical economic analysis of products liability. Products liability law applies to situations wherein victims and injurers have a prior relationship as buyers and sellers of a product or service (it may also address harms to other victims who are third parties). Thus, the market may provide an alternative mechanism (to litigation) for shifting risks and costs between these agents. A comprehensive analysis of products liability necessitates consideration of both the market and legal incentives agents face. As discussed below, this body of literature has developed over the past three to four decades and has applied tools from micro economic analysis to understand the incentives inherent in tort law generally, and products liability more specifically.

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