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

Christoph Rössler () and Tim Friehe
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Christoph Rössler: University of Marburg

European Journal of Law and Economics, 2020, vol. 50, issue 2, No 5, 295-312

Abstract: Abstract 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.

Keywords: Product liability; Moral concerns; Image (search for similar items in EconPapers)
JEL-codes: D42 D8 K13 L12 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10657-020-09666-2

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