Author (Your Name)

Jim Drews, Colby College

Date of Award


Document Type

Honors Thesis (Colby Access Only)


Colby College. Economics Dept.


Randy A. Nelson


The basis for the change in the legal standard for liability in cases of product related injury from one of negligence to one of strict producer liability is found the Restatement (Second) of Torts, section 402A, from 1965. Section 402A declares that, "a manufacturer is liable for a product related injury only when a product is found to be both unreasonably dangerous and defective" (Priest 207). Essentially, under strict liability, the liability is simply the result of a "wrong that was done," as opposed to the breaching of a contract (McKean 615). The most significant impact of the change to strict producer liability is that it increases the likelihood of the producer being held liable in the case of an accident (McKean 616). It is generally held that the goals of this strict producer liability standard were consistent with the two most important economics goals of any legal rule - that the rule provides "incentives to reduce the accident rate, and for accidents that cannot be prevented.. .provide a form of victim compensation insurance tied to product sales" (185). From an economic perspective it is desirable that liability be borne by the party with the lower relative marginal cost of prevention (Priest 196). Therefore it is necessary for the courts to perform cost-benefit analysis to determine the degree to which contributory negligence on the part of the consumer was actually responsible for a given accident (Priest 197).


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Liability (Law) -- Economic aspects -- United States, Products liability -- Economic aspects -- United States, Tort liability of corporations -- United States, Product safety -- United States, Aeronautics -- United States -- Safety measures