Postprint version. Published in International Review of Law and Economics, Volume 20, Issue 2, June 1, 2000, pages 269-283.
Copyright © 2000 Elsevier Inc. All rights reserved.
NOTE: At the time of publication, the author Stephen Hamilton was not yet affiliated with Cal Poly.
The definitive version is available at http://dx.doi.org/10.1016/S0144-8188(00)00029-6.
The article characterizes the entry incentives provided by increases in product liability under various forms of competition. It is demonstrated that the entry of small, high-cost firms is likely to occur in imperfectly competitive markets when the average damage increases with industry output. Special cases are considered, including Cournot–Nash oligopoly and dominant firm-competitive fringe.