Publications
Publications
- August 2017
- Journal of Law & Economics
Tort Reform and Innovation
By: Alberto Galasso and Hong Luo
Abstract
Current academic and policy debates focus on the impact of tort reforms on physicians’ behavior and medical costs. This paper examines whether these reforms also affect incentives to develop new technologies. We develop a theoretical model that predicts that the impact of reducing liability risks for physicians on innovation may be positive or negative, depending on the characteristics of the technology. Empirically, we find that, on average, laws that limit the liability exposure of healthcare providers are associated with a significant reduction in medical device patenting. Tort reforms have the strongest impact in medical fields in which the probability of facing a malpractice claim is the largest, and they do not seem to affect the amount of new technologies of the highest and lowest quality. Our results underscore the importance of considering dynamic effects in the economic analysis of tort laws.
Keywords
Governing Rules, Regulations, And Reforms; Health Care And Treatment; Technological Innovation; Legal Liability; Medical Devices And Supplies Industry
Citation
Galasso, Alberto, and Hong Luo. "Tort Reform and Innovation." Journal of Law & Economics 60, no. 3 (August 2017): 385–412.
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