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Regulation with Experimentation : Ex Ante Approval, Ex Post Withdrawal, and Liability

We analyze the optimal mix of ex ante experimentation and ex post learning for the dynamic adoption of activities with uncertain payoffs in a two-phase model of information diffusion. In a first preintroduction phase, costly experimentation is undertaken to decide whether to adopt an activity or abandon experimentation. In a second stage following adoption, learning can continue possibly at a different pace while the activity remains in place; the withdrawal option is exercised following the accumulation of sufficiently bad news. We compare from a law and economics perspective the performance of three regulatory frameworks commonly adopted to govern private experimentation and adoption incentives: liability, withdrawal, and authorization regulation. Liability should be preempted to avoid chilling of activities that generate large positive externalities consistent with the preemption doctrine. Liability should be used to discourage excessive experimentation for activities that generate small positive externalities. Authorization regulation should be lenient whenever it is used consistent with the organization of regulation in a number of areas, ranging from product safety to antitrust.

Ketersediaan

Informasi Detail

Judul Seri

MANAGEMENT SCIENCE; Vol.68 No.7 July 2022

No. Panggil

-

Penerbit

: .,

Deskripsi Fisik

p. 5330-5347

Bahasa

English

ISBN/ISSN

-

Klasifikasi

NONE

Tipe Isi

-

Tipe Media

-

Tipe Pembawa

-

Edisi

-

Subjek

LIABILITY
EXPERIMENTATION
WITHDRAWAL
AUTHORIZATION REGULATION
PREEMPTION DOCTRINE

Info Detail Spesifik

https://doi.org/10.1287/mnsc.2021.4164

Pernyataan Tanggungjawab

Emeric Henry, Marco Loseto, Marco Ottaviani

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