The central hypothesis of this article is that liability regulation can foster firms' incentives to study the (potential) dangers of their products. We discuss alternative views and develop a formal model to analyze a firm's incentive structure under the application of hindsight liability. We...

The central hypothesis of this article is that liability regulation can foster firms' incentives to study the (potential) dangers of their products. We discuss alternative views and develop a formal model to analyze a firm's incentive structure under the application of hindsight liability. We...