 Patent Races for COVID-19 Vaccines and Liability RulesAsian Journal of Law and Economics, 2020, vol. 11, issue 3, 13 Abstract: I analyze a model of patent races for COVID-19 vaccines under alternative liability rules. The first inventor of the vaccine gets the monopoly rent, but must assume full liability from its side effects. In this model, firms choose two kinds of investments, one for inventing a vaccine and the other for its safety. I show that firms have an incentive to overinvest in both activities under strict liability. This is contrasted with the established result established that the injurer takes socially optimal accident-preventing precaution under strict liability. This contrast comes from the competition effect. Overinvestment in inventing vaccines due to competition makes a firm overinvest in safety as well. I also argue that it is undesirable for firms to get full or partial exemption from liability, because it would reduce the incentive to invest in safety. Instead, reducing the monopoly rent by regulating the vaccine price resolves both overinvestment problems. Keywords: COVID-19; liability rules; patent race; product liability; vaccine (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bpj:ajlecn:v:11:y:2020:i:3:p:13:n:4 Ordering information: This journal article can be ordered from Access Statistics for this article Asian Journal of Law and Economics is currently edited by Noriyuki Yanagawa More articles in Asian Journal of Law and Economics from De Gruyter |
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