The Impact of External Parties on Brand-Name Capital: The 1982 Tylenol Poisonings and Subsequent Cases

Mark Mitchell

Economic Inquiry, 1989, vol. 27, issue 4, 601-18

Abstract: An examination of the 1982 Tylenol poisonings reveals stock-market losses to Johnson & Johnson that far exceed direct costs and losses shared with other pain-reliever producers. This evidence provides support for the Klein and Leffler (1981) theory of brand names as quality-assuring mechanisms. Of the subsequent cases, only the 1986 Tylenol poisonings were associated with significant stock-market losses. Prior to the 1982 and 1986 Tylenol poisonings, Tylenol was the number one pain reliever, whereas the other pain relievers that were poisoned had a much lower level of brand-name capital to lose. Copyright 1989 by Oxford University Press.

Date: 1989
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