Innovation, Tort Law, and Competition

Florian Baumann and Klaus Heine

Journal of Institutional and Theoretical Economics (JITE), 2013, vol. 169, issue 4, 703-719

Abstract: We examine the link between innovative activity on the part of firms, the competitive pressure to introduce innovations, and optimal damages awards. While innovative activity brings forth valuable new products for consumers, competitive pressure in the ensuing innovation race induces firms to launch innovations too early, thereby raising the likelihood of severe product risks above the optimal failure rate. Introducing innovations too early may call for the application of punitive damages instead of mere compensation of harm caused, in order to decelerate such welfare-reducing innovation races.

JEL-codes: K13 L13 O31 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (7)

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Working Paper: Innovation, tort law, and competition (2012)
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DOI: 10.1628/093245613X671201

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