Abstract

We extend consideration of cumulative harm in products liability to the case of bilateral care. For this specification, the level of care and the level of output chosen by the firm are inextricably interrelated, and different liability regimes yield different combinations of care and output. As in the case of bilateral care with proportional harm, strict liability by itself leads to moral hazard on the part of the consumer, but strict liability with a defense of contributory negligence on the part of the consumer is now a resilient (that is, both robust and convergent) liability rule when harm is cumulative.

Replaced by

Andrew F. Daughety, and Jennifer F. Reinganum, “Cumulative Harm, Products Liability and Bilateral Care”, American Law and Economics Review, September 2013.