Product Safety, Buybacks and the Post-Sale Duty to Warn

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Product Safety, Buybacks and the Post-Sale Duty to Warn

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Title: Product Safety, Buybacks and the Post-Sale Duty to Warn
Author: Spier, Kathryn E.
Citation: Kathryn E. Spier, Product Safety, Buybacks and the Post-Sale Duty to Warn, 27 J.L. Econ. & Org. 515 (2011).
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Abstract: A manufacturer learns a product's risks after it has been sold and distributed to consumers. When held strictly liable for product-related injuries, the manufacturer offers to repurchase the product when the risk exceeds a threshold. Consumers accept the offer when their private valuations of consumption are smaller than the buyback price. The manufacturer's private incentives to stage a buyback are insufficient, the buyback price offered is too low, and the continued product usage by consumers is excessive. The ability of the manufacturer to repurchase the product ex post reduces the incentive to design safer products ex ante. A negligence rule, the “post-sale duty to warn,” implements the social welfare benchmark.
Published Version: http://jleo.oxfordjournals.org/content/27/3/515.full.pdf
Other Sources: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1023125
http://www.law.harvard.edu/programs/olin_center/papers/pdf/Spier_597_Revised.pdf
http://lsr.nellco.org/cgi/viewcontent.cgi?article=1385&context=harvard_olin
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:12007323
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