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Article: Innovation and our product liability system: let us end the conflict on incentives.
- Article from:
- Business Economics
- Article date:
- October 1, 1992
- Author:
CopyrightCOPYRIGHT 1992 The National Association for Business Economists. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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EVERY COMPANY has a "risk budget" for betting on the future. Innovation, research and development are a part of it. So are a company's investments, new marketing programs, and other initiatives they hope will pay off later. Increasingly, our country's legal liability system must be included in that risk budget too, because of the great uncertainty it imposes whether companies act responsibly or not. With today's liability system, the risk of paying out, not the chance of paying off, becomes an important factor on product decisions.
Courts are subjecting the makers of useful products and manufacturers who opt for improvements to the risk of severe sanctions, including ...