Liability, morality, and image concerns in product accidents with third parties

• Autores: Christoph Rössler, Tim Friehe
• Localización: European journal of law and economics, ISSN 0929-1261, Vol. 50, Nº 2, 2020, págs. 295-312
• Idioma: inglés
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• Resumen

  • This paper explores how consumers’ moral and image concerns influence the equilibrium in a product-accident model in which third parties incur harm. We differentiate results according to whether the product is supplied by a monopolistic firm or competitive ones. Assuming incomplete compensation of third parties, we find that both moral and image concerns of consumers increase product safety in the context of a competitive market, while the monopolist’s product safety level varies exclusively with consumers’ morality. Comparing market outcomes, we find that the monopolist’s product safety levels may induce greater welfare than a competitive industry.