Optimally designed reimbursement and liability rules lead physicians to practice efficiently and carefully. The introduction of supply-side cost sharing in Germany and elsewhere should therefore be complemented by an appropriate liability incentive. Otherwise, resources are used efficiently but...

The US and the EU recently introduced regulation to curb the extent of risky off-label drug use. It offers manufacturers a prolongation of patent protection or exclusivity if they invest in pediatric clinical tests. This paper shows that a reinforcement of physician liability for off-label use...

Real-world observations of negligent and defensive medicine challenge malpractice liability. Based on a principal-agent model with two types of physicians I show that lawsuit costs affect the patients' decision to sue and the physicians' level of care under the negligence rule, leading to a...

Optimally designed reimbursement and liability rules lead physicians to practice efficiently and carefully. The introduction of supply-side cost sharing in Germany and elsewhere should therefore be complemented by an appropriate liability incentive. Otherwise, resources are used efficiently but...