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Spring 2001

ISSN 0890-913X

Volume 16, Number 2

Categories: Spring 2001

Buyer and Seller Beware!

Auke R. Leen, Wageningen University and Research Centre

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JournalofPrivateEnterpriseBuyerandSellerBeware!AukeR.LeenWageningenUniversityandResearchCentreWhatsystemofproductliabilitysuitsthemarketprocessbest?Whatsystemeducatestheconsumerbestabouttheessenceofthemarketeconomy?Sinceinapaperasbriefasthisone,nocomprehensivediscussionofproductliabilityandtheliabilitysystemseffectingitcanbegiven,IwillconcentrateontheAustrianperspective.Subjectivismandentrepreneurshipareemphasized.ContrarytomostmodernAustriansCwhodopreferasystemofstrictliabilityCIfindtheanswerintheoldsystemofbuyerandsellerbeware.Productliability,partoftortlaw,dealswithharmsarisingfromcommercialproducts.Itismostlyaboutphysicalinjuriestotheconsumer'slifeandproperty,causedbydefectiveorunreasonablydangerousproducts.Fortheneoclassical,thedevelopmentseemedtobedrivenbyacost-benefitcalculusbasedonstandardcriteriaofefficiency.Mainstreamlawandeconomicsinitspositivedimensionsupposesthattheliabilitysystemitselfandeverychangeinitareefficient.Initsnormativedimensionitaddressestheissueofhowlegalrulesmightbeformulatedtomaximizethevalueofproduction.Thejudge,usingoneofthemostfamousformulasintheeconomicanalysisoflaw,theso-calledHandFormulaafterJudgeLearnedHand(cp.CooterandUlen,1988,pp.360-362),balancesexpectedaccidentcostsagainstthecostsofmakingtheproductsafer.AdefendantisguiltyofnegligenceifPtimesLisgreaterthanB.WherePistheprobability,alosswilloccur,Listhevalueassociatedwiththeloss,andBthecostassociatedwithpreventingit.

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Metadata [hide]

Title	Buyer and Seller Beware!
Authors/Creators:	Auke R. Leen, Wageningen University and Research Centre
Year:	2001
Volume:	16
Number:	2
Pages:	75 - 90
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles

Citation:
Leen, Auke R. / 2001. "Buyer and Seller Beware!." The Journal of Private Enterprise, 16(2): 75-90.