In this chapter we consider how models of imperfect competition, developed by scholars working in industrial organization, provide insight into an important area of law: products liability (that is, liability for harms and losses associated with goods and services sold via markets). Remarkably,...

A firm sells a dangerous product to heterogeneous consumers. Higher consumer types suffer accidents more often but may enjoy higher gross benefits. The firm invests resources to reduce the frequency of accidents. When the consumer's net benefit function (gross benefits minus expected harms) is...

This paper analyzes the workings of liability when harm-inflicting consumers are present biased and both product safety and consumer care influence expected harm. We show that present bias introduces a rationale for shifting some losses onto the manufacturer, in stark contrast with the baseline...

Market forces, supplemented by government policy, affect how firms and households jointly determine product and workplace safety levels. After developing the economic theory of how labor and product markets pair prices and health risks we then explain the effects of the relevant government...

This paper establishes that tort damages multipliers higher than one can be an instrument to induce imperfectly competitive producers to invest in product safety at socially optimal levels. In their selection of product safety levels, producers seek to maximize profits, neglecting the fact that...