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Drug Product Liability And Health Care Delivery Systems, William M. Sage

Faculty Scholarship

This note will use the principles of law and economics to examine the interaction of market structures and product liability rules in a world of imperfect information. The goals of the analysis are to create incentives for optimal care by producers and consumers, induce the socially appropriate amount of consumption of each product (often referred to as the "activity level"), and minimize the costs of bearing the risk of injury. The note will conclude that the existence of health maintenance organizations ("HMOs") and similar prepaid providers with superior information capacity and total patient care responsibility may create a context in …