Strategic R&D Investment Under Liability Law |
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| Authors: | Alfred Endres Tim Friehe |
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| Institution: | 1. University of Hagen, Department of Economics , Profilstr. 8, 58084, Hagen , Germany;2. University of Witten-Herdecke, Department of Economics , Witten , Germany;3. University of Konstanz, Department of Economics , Box 136, 78457, Konstanz , Germany;4. CESifo , Munich , Germany |
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| Abstract: | This paper analyzes the incentives of duopolists to invest in advanced care technology under liability law. We establish that investment incentives under strict liability are in line with the taxonomy of Fudenberg and Tirole (1984), whereas the investment incentives under negligence most likely are not. Indeed, investment incentives under negligence are dependent on the timing of the policy maker’s regulations, whether or not due care is firm specific, and whether or not precautionary measures are durable. |
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| Keywords: | Strategic Behavior Care Induced Technical Change Liability Law Imperfect Competition |
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