Economic Consequences of Third-Party Actions for Workplace Injuries
Safety has been an issue of importance to business since long before the industrial revolution. The advent of industry, however, brought with it both a concentration of exposure to loss (many people injured simultaneously) and a complexity of loss potential through such environmental factors as use of synthetic materials. Demand for safety rose significantly as a result. Most attention to safety, however, was focused on workplace hazards. Not until after the 1965 Restatement of Torts (Second) did product safety become a prominent issue. Since then, and especially following the Report of the National Commission on Product Safety (NCPS), the economics of (product) safety has been a topic given substantial treatment in economic, legal, and insurance literature. Much of the existing literature analyzes the impact on efficient resource allocation of regulated safety standards, mandated compensation awards, and various liability schemes. In this article, the question of what effect third-party actions in work-related accidents have on safety is considered.
KeywordsImperfect Information Strict Liability Product Liability Safety Precaution Liability Rule
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