Patent Races for COVID-19 Vaccines and Liability Rules
I analyze a model of patent races for COVID-19 vaccines under alternative liability rules. The first inventor of the vaccine gets the monopoly rent, but must assume full liability from its side effects. In this model, firms choose two kinds of investments, one for inventing a vaccine and the other f...
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Veröffentlicht in: | Asian journal of law and economics 2020-12, Vol.11 (3) |
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description | I analyze a model of patent races for COVID-19 vaccines under alternative liability rules. The first inventor of the vaccine gets the monopoly rent, but must assume full liability from its side effects. In this model, firms choose two kinds of investments, one for inventing a vaccine and the other for its safety. I show that firms have an incentive to overinvest in both activities under strict liability. This is contrasted with the established result established that the injurer takes socially optimal accident-preventing precaution under strict liability. This contrast comes from the competition effect. Overinvestment in inventing vaccines due to competition makes a firm overinvest in safety as well. I also argue that it is undesirable for firms to get full or partial exemption from liability, because it would reduce the incentive to invest in safety. Instead, reducing the monopoly rent by regulating the vaccine price resolves both overinvestment problems. |
doi_str_mv | 10.1515/ajle-2020-0042 |
format | Article |
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The first inventor of the vaccine gets the monopoly rent, but must assume full liability from its side effects. In this model, firms choose two kinds of investments, one for inventing a vaccine and the other for its safety. I show that firms have an incentive to overinvest in both activities under strict liability. This is contrasted with the established result established that the injurer takes socially optimal accident-preventing precaution under strict liability. This contrast comes from the competition effect. Overinvestment in inventing vaccines due to competition makes a firm overinvest in safety as well. I also argue that it is undesirable for firms to get full or partial exemption from liability, because it would reduce the incentive to invest in safety. Instead, reducing the monopoly rent by regulating the vaccine price resolves both overinvestment problems.</description><identifier>ISSN: 2194-6086</identifier><identifier>ISSN: 2154-4611</identifier><identifier>EISSN: 2154-4611</identifier><identifier>DOI: 10.1515/ajle-2020-0042</identifier><language>eng</language><publisher>Berlin: De Gruyter</publisher><subject>Coronaviruses ; COVID-19 ; COVID-19 vaccines ; K13 ; Liability ; liability rules ; patent race ; product liability ; Products liability ; vaccine ; Vaccines</subject><ispartof>Asian journal of law and economics, 2020-12, Vol.11 (3)</ispartof><rights>2020 Walter de Gruyter GmbH, Berlin/Boston</rights><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c390t-692ad617c97af037ad93b02724322bcea450a1ab0d3b56e510b803a1c2c405c13</citedby><cites>FETCH-LOGICAL-c390t-692ad617c97af037ad93b02724322bcea450a1ab0d3b56e510b803a1c2c405c13</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.degruyter.com/document/doi/10.1515/ajle-2020-0042/pdf$$EPDF$$P50$$Gwalterdegruyter$$H</linktopdf><linktohtml>$$Uhttps://www.degruyter.com/document/doi/10.1515/ajle-2020-0042/html$$EHTML$$P50$$Gwalterdegruyter$$H</linktohtml><link.rule.ids>314,776,780,27901,27902,66497,68281</link.rule.ids></links><search><creatorcontrib>Kim, Jeong-Yoo</creatorcontrib><title>Patent Races for COVID-19 Vaccines and Liability Rules</title><title>Asian journal of law and economics</title><description>I analyze a model of patent races for COVID-19 vaccines under alternative liability rules. The first inventor of the vaccine gets the monopoly rent, but must assume full liability from its side effects. In this model, firms choose two kinds of investments, one for inventing a vaccine and the other for its safety. I show that firms have an incentive to overinvest in both activities under strict liability. This is contrasted with the established result established that the injurer takes socially optimal accident-preventing precaution under strict liability. This contrast comes from the competition effect. Overinvestment in inventing vaccines due to competition makes a firm overinvest in safety as well. I also argue that it is undesirable for firms to get full or partial exemption from liability, because it would reduce the incentive to invest in safety. Instead, reducing the monopoly rent by regulating the vaccine price resolves both overinvestment problems.</description><subject>Coronaviruses</subject><subject>COVID-19</subject><subject>COVID-19 vaccines</subject><subject>K13</subject><subject>Liability</subject><subject>liability rules</subject><subject>patent race</subject><subject>product liability</subject><subject>Products 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Jeong-Yoo</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c390t-692ad617c97af037ad93b02724322bcea450a1ab0d3b56e510b803a1c2c405c13</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2020</creationdate><topic>Coronaviruses</topic><topic>COVID-19</topic><topic>COVID-19 vaccines</topic><topic>K13</topic><topic>Liability</topic><topic>liability rules</topic><topic>patent race</topic><topic>product liability</topic><topic>Products liability</topic><topic>vaccine</topic><topic>Vaccines</topic><toplevel>online_resources</toplevel><creatorcontrib>Kim, Jeong-Yoo</creatorcontrib><collection>CrossRef</collection><collection>ProQuest Central (Corporate)</collection><collection>Asian Business Database</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni 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Rules</atitle><jtitle>Asian journal of law and economics</jtitle><date>2020-12-01</date><risdate>2020</risdate><volume>11</volume><issue>3</issue><issn>2194-6086</issn><issn>2154-4611</issn><eissn>2154-4611</eissn><abstract>I analyze a model of patent races for COVID-19 vaccines under alternative liability rules. The first inventor of the vaccine gets the monopoly rent, but must assume full liability from its side effects. In this model, firms choose two kinds of investments, one for inventing a vaccine and the other for its safety. I show that firms have an incentive to overinvest in both activities under strict liability. This is contrasted with the established result established that the injurer takes socially optimal accident-preventing precaution under strict liability. This contrast comes from the competition effect. Overinvestment in inventing vaccines due to competition makes a firm overinvest in safety as well. I also argue that it is undesirable for firms to get full or partial exemption from liability, because it would reduce the incentive to invest in safety. Instead, reducing the monopoly rent by regulating the vaccine price resolves both overinvestment problems.</abstract><cop>Berlin</cop><pub>De Gruyter</pub><doi>10.1515/ajle-2020-0042</doi><tpages>13</tpages><oa>free_for_read</oa></addata></record> |
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issn | 2194-6086 2154-4611 2154-4611 |
language | eng |
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source | HeinOnline Law Journal Library; De Gruyter journals |
subjects | Coronaviruses COVID-19 COVID-19 vaccines K13 Liability liability rules patent race product liability Products liability vaccine Vaccines |
title | Patent Races for COVID-19 Vaccines and Liability Rules |
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