Products Liability and Product Safety: Japan and the U.S.

Abstract

Consumers in wealthy countries like the U.S. and Japan usually know roughly what they want, and how to obtain it. In such markets, the sellers who thrive should tend to be those who offer consumers the approximate level of safety they want -- no matter what the law might be. For the most part, U.S. data confirm this essentially Coasian logic: a shift in the product liability rule from negligence to strict liability seems not to have raised product safety. Unfortunately for the empiricist, however, the U.S. complicates the empirical task by combining state-based liability standards with a national product market. Although Japan presents its own empirical difficulties, it does couple national law with a national market. In 1995, the Diet adopted strict products liability. Before, courts had adjudicated product disputes in negligence or contract; after 1995, they applied strict liability. As in the U.S., however, the level of product safety seems not to have risen. To explore this issue, I canvass a wide variety of accident data. Each source presents its own (sometimes major) limitations, but each suggests the same conclusion: the 1995 statute did not increase product safety levels, Yet the1995 statute did not cause any of the perverse effects sometimes attributed to strict products liability in the U.S. either. This fact suggests that the apparent perverse results in the U.S. may not have derived from the liability rule itself. Instead, they probably resulted from the interaction between the rule and several procedural devices peculiar to the U.S.