Proceedings of the New York State Economics Association


Does Reducing Product Liability Affect Market Value?

Gayle L. DeLong

vol. 7, October 2014, p. 39-49


I investigate whether shielding manufacturers from product liability affects their market values. Using the vaccine industry as an example, I examine events surrounding the introduction of the U.S. National Childhood Vaccine Injury Act (NCVIA), legislation that protected vaccine firms from product liability. The market reacted negatively when courts enforced liability. Examining 133 new vaccine approvals, I find the market awarded the licensing of a new vaccine in the United States 1.3 percent higher after NCVIA compared with before the legislation, when the market was indifferent to the announcement of a new vaccine. Results suggest that preempting product liability litigation can contribute to transforming a low-profit business into an attractive product line.


suggested citation:

Gayle L. DeLong. "Does Reducing Product Liability Affect Market Value?." Proceedings of the New York State Economics Association. vol. 7, October 2014, p. 39-49

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