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Unraveled: The Failure of Products Liability Markets Michael J. Fluhr, Harvard Law School Download the Paper (PDF format) - December 6, 2006 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing. ABSTRACT: Conventional law and economics wisdom suggests that efficiency is served by allowing purchasers of goods to waive strict liability. Intuition suggests that where purchasers can bear risk of product defects more cheaply than can sellers and manufacturers, laws should permit them to do so. However, even rational and completely informed buyers are vulnerable to a market failure, which this Article dubs “unraveling,” that may cause all buyers to successively waive strict liability even though it may be more efficient ex ante if they did not. This Article explains, models, and explores this unraveling phenomenon. It distinguishes the markets in which unraveling is likely to occur and concludes by suggesting rules and methodologies for pinpointing and preventing unraveling. SUGGESTED CITATION: Michael J. Fluhr, "Unraveled: The Failure of Products Liability Markets" (December 6, 2006). Harvard Law School. Harvard Law School Student Scholarship Series. Paper 9. http://lsr.nellco.org/harvard/students/papers/9 | REPOSITORY HOME  | SEARCH  | MY ACCOUNT  | NELLCO HOME | Powered by bepress.