Product safety: liability, R&D, and signaling

Article Abstract:

A monopoly model of product design and safety signaling that includes a parametric liability specification is developed. In this model, the safety of the product of the firm is imperfect and unobservable, which may result in an injury to a customer and liability-based losses for the firm. Pricing and liability are found to jointly distribute the value and losses resulting from the product. Firms with full marginal costs that are mostly affected by production costs indicate safety through high pricing while firms with full marginal costs that are mostly affected by liability losses signal safety via high volume.

Models, Product development, Product safety, Industrial design

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Search equilibrium with endogenous recall

Article Abstract:

Search models characterize recall as dependent on customer memory and is exogenous. The study attempts to prove that recall is endogenous or provided by the firm through retention of a good. A search model illustrating this shows that recall is part of the search equilibrium determined by firms. Perfect-recall requires a firm to hold the good so as to be available for the customer at all times, while no-recall does not require firms to hold the good at all. The analysis of price and recall policies influence the customers expected total costs of search.

Analysis, Consumer behavior, Product recalls

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Keeping society in the dark: on the admissibility of pretrial negotiations as evidence in court

Article Abstract:

A model of the settlement and litigation process was developed to study the effect of transforming presently inadmissible settlement demands into admissible demands as evidence in court in the event that a case progresses to trial. Admissibility rules were found to affect efficiency, cause distributional consequences and did not necessarily benefit all parties. Results did not support the assumption that maintaining confidentiality is in the interest of all or most parties.

Research, Compromise and settlement, Settlements (Law), Pre-trial procedure, Pretrial procedure

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