EconPapers    
Economics at your fingertips  
 

Product Liability Litigation and Innovation: Evidence from Medical Devices

Alberto Galasso and Hong Luo

No 32215, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the relationship between product liability litigation and innovation by systematically combining data on product liability lawsuits with data on new product introductions in a panel dataset of leading medical device firms. We first document a decline in the propensity to introduce new products for both defendant firms and other firms operating in litigated device categories. This decline, however, does not spill over to other device categories, and we also do not find any slowing down in firms' patenting activities. We then show that changes in two features of the regulatory environment---(1) the availability of public information regarding adverse events and (2) federal law taking precedence over state law---substantially affect the likelihood of litigation. These changes also provide quasi-exogenous variations in litigation that confirm our baseline findings. Finally, we show that litigation appears to induce firms to develop safer devices. Overall, our findings suggest that product liability litigation affects the rate and direction of technological progress, and that safety regulation and liability regimes interact with one another in significant ways.

JEL-codes: K13 K41 L51 O32 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-ind, nep-ino, nep-law, nep-sbm and nep-tid
Note: IO LE PR
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w32215.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

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:nbr:nberwo:32215

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32215
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2024-04-28
Handle: RePEc:nbr:nberwo:32215