Research from A.M. Polinsky and colleague has provided new insights into product liability


Publish Date:
May 13, 2010
Politics & Government Week
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Professor A. Mitchell Polinsky’s research is excerpted from a study published in the Harvard Law Review titled, “The Uneasy Case for Product Liability”:

According to recent research published in the journal Harvard Law Review,
“In this Article we compare the benefits of product liability to its costs and
conclude that the case for product liability is weak for a wide range of
products. One benefit of product liability is that it can induce firms to
improve product safety.”

“Even in the absence of product liability, however, firms would often be
motivated by market forces to enhance product safety because their sales may
fall if their products harm consumers. Moreover, products must frequently
conform to safety regulations. Consequently, product liability might not exert a
significant additional influence on product safety for many products and
empirical studies of several widely sold products lend support to this
hypothesis. A second benefit of product liability is that it can improve
consumer purchase decisions by causing product prices to increase to reflect
product risks. But because of litigation costs and other factors, product
liability may raise prices excessively and undesirably chill purchases. A third
benefit of product liability is that it compensates victims of product-related
accidents for their losses. Yet this benefit is only partial, for accident
victims are frequently compensated by insurers for some or all of their losses.
Furthermore, the award of damages for pain and suffering tends to reduce the
welfare of individuals because it effectively forces them to purchase insurance
for a type of loss for which they ordinarily do not wish to be covered. Opposing
the benefits of product liability are its costs, which are great. Notably, the
transfer of a dollar to a victim of a product accident through the liability
system requires more than a dollar on average in legal expenses. Given the
limited nature of the benefits and the high costs of product liability, we come
to the judgment that its use is often unwarranted. This is especially likely for
products for which market forces and regulation are relatively strong, which
includes many widely sold products,” wrote A.M. Polinsky and colleagues.

The researchers concluded: “Our generally skeptical assessment of product
liability for such products is in tension with the broad social endorsement of
this form of liability.”

Polinsky and colleagues published their study in Harvard Law Review (The
Uneasy Case For Product Liability. Harvard Law Review, 2010;123(6):1437-1492).

For additional information, contact A.M. Polinsky, Stanford Law School,
Stanford, CA, USA.