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Cover of: Innovation, Tort Law, and Competition
Florian Baumann, Klaus Heine

Innovation, Tort Law, and Competition

Section: Articles
Volume 169 (2013) / Issue 4, pp. 703-719 (17)
Published 09.07.2018
DOI 10.1628/093245613X671201
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Summary
We examine the link between innovative activity on the part of firms, the competitive pressure to introduce innovations, and optimal damages awards. While innovative activity brings forth valuable new products for consumers, competitive pressure in the ensuing innovation race induces firms to launch innovations too early, thereby raising the likelihood of severe product risks above the optimal failure rate. Introducing innovations too early may call for the application of punitive damages instead of mere compensation of harm caused, in order to decelerate such welfare-reducing innovation races.