Campbell, Tim S; Chan, Yuk-shee; Marino, Anthony M - In: Journal of Regulatory Economics 3 (1991) 1, pp. 57-68
This paper studies a monopoly firm with the ability to conduct costly premarket testing of its product in order to predict how safe this product is to consume. While there are private incentives to test, the amount of testing effort supplied by a monopolist need not be optimal. In a model which...