Products Liability, Signaling and Disclosure
Bibliographic Data
| ID | 24035274 |
|---|---|
| Authors | Andrew F Daughety (Vanderbilt University), Jennifer F Reinganum (Vanderbilt University) |
| Year | 2008 |
| Volume | 164 |
| Issue | 1 |
| Pages | 106-126 |
| Publication date | 2008-01-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Institutional and Theoretical Economics JITE (JOURNAL) |
| Journal identifiers | ISSN: 0932-4569 • E-ISSN: 1614-0559 |
| Publisher | Mohr Siebeck (PUBLISHER) |
| DOI | 10.1628/jite-2008-0005 |
| OpenAlex | W3121207828 |
| Language | EN |
| Citations received | 1 |
| References cited | 5 |
We examine the behavior of a firm that produces a product with a privately-observed safety attribute. Costly disclosure and price-signaling of safety are alternative firm strategies. The liability system and production cost determine the firm's full marginal cost. When the firm's full marginal cost is increasing (decreasing) in safety, a firm with a safer product will distort its price upward (downward) and will sometimes inefficiently choose to signal rather than disclose (to disclose rather than signal). We also allow for a small fraction of naively optimistic (pessimistic) consumers; this leads to less price distortion and decreased (increased) incentives to disclose.
Business · Liability · Accounting · Ethics in Business and Education · Law, Economics, and Judicial Systems · Regulation and Compliance Studies
| Citations per year | 0.25 |
|---|---|
| Citation span | 2022 - 2022 (1) |
| Highly cited | No |