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When does Product Liability Risk Chill Innovation? Evidence from Medical Implants / Alberto Galasso, Hong Luo.
- Format:
- Book
- Author/Creator:
- Galasso, Alberto.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w25068.
- NBER working paper series no. w25068
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- Liability laws designed to compensate for harms caused by defective products may also affect innovation. We examine this issue by exploiting a major quasi-exogenous increase in liability risk faced by US suppliers of polymers used to manufacture medical implants. Difference-in-differences analyses show that this surge in suppliers' liability risk had a large and negative impact on downstream innovation in medical implants, but it had no significant effect on upstream polymer patenting. Our findings suggest that liability risk can percolate throughout a vertical chain and may have a significant chilling effect on downstream innovation.
- Notes:
- Print version record
- September 2018.
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