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In this paper, we examine the link between innovative activity on the part of firms, the competitive pressure to introduce innovations and optimal damages awards. While innovative activity brings forth valuable new products for consumers, competitive pressure in the ensuing innovation race...
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We contrast alternative liability rules for social control of product risks when heterogeneous consumers considering …' mispredictions vary with the prevailing liability regime. We first characterize the consumers' purchasing decision and the … equilibrium levels of safety and activity from the product's usage under no liability, strict liability, and negligence rule. We …
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