Product liability influences incentives for horizontal mergers

Andreea Cosnita-Langlais, Tim Friehe and Eric Langlais
Additional contact information
Andreea Cosnita-Langlais: CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre
Tim Friehe: University of Marburg, Public Economics Group
Eric Langlais: CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre

Post-Print from HAL

Abstract: This paper explores how product liability rules affect merger incentives, with consumer risk perception as a key factor. We find a striking contrast: when consumers overestimate product risk, no liability generates the strongest merger incentives, while strict liability and negligence have weaker, similar effects. Conversely, when consumers underestimate risk, strict liability maximizes merger incentives, and no liability minimizes them. We also demonstrate that horizontal mergers without efficiency effects can unexpectedly increase welfare under no liability or negligence when consumers underestimate risk—a result that is impossible under strict liability.

Keywords: Cournot Market structure; Product risk misperception; Merger; Liability (search for similar items in EconPapers)
Date: 2025-09-23
References: Add references at CitEc
Citations:

Published in International Review of Law and Economics, 2025, 84 (December), pp.Article 106302. ⟨10.1016/j.irle.2025.106302⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05271189

DOI: 10.1016/j.irle.2025.106302

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().