Recent high-profile lawsuits involving cigarettes, guns, breast implants, and other products have created new frictions between litigation and regulation. Increasingly, litigation is being used as a financial lever to force companies to accept negotiated regulatory policies --policies that invariably involve less public input and accountability than those arising from government regulation. The process not only usurps the traditional governmental authority for regulation, but also shifts the locus of establishing tax policy from the legislature to the parties involved in the litigation. Citizen interests are not explicitly represented and there is no mechanism to ensure that these outcomes are in society's best interests. By focusing on case studies involving the tobacco industry, guns, lead paint, breast implants, and health maintenance organizations, the contributors to this volume collectively shed light on the likely consequences of regulation through litigation for insurance markets and society at large. They analyze the ramifications of large-scale lawsuits, mass torts, and class actions for the insurance market, and advocate increased public scrutiny of attorney reimbursement and a competitive bidding process for all lawsuits involving government entities as the plaintiffs.

Are liability "crises" an inevitable part of the modern industrial landscape? Does the inherent nature of the insurance industry promote recurring liability crises? What have been the effects of the liability reforms of the 1990s? Should lawyers be given de facto regulatory authority? This report provides perspective on these and other key issues concerning the law and economics of products liability. The authors begins with a brief description of the evolution of products liability doctrine in the U.S., up to the point of the liability crisis of the late 1980s. They discuss the economic implications of product risk for both consumers and producers, offer economic hypothesis on the implications of the increased scope of liability and subsequent reforms, and provide an update of trends in litigation and liability law. The book ends with a discussion of pending legislation and prospects for further improvements. Moore and Viscusi make the point that effective liability policy calls for a balancing of the incentives for improved public safety on one hand, and the benefits of new and existing products on the other.