| Product liability-the body of law governing the allocation of personal harm and property losses caused by defective and unreasonably dangerous products use-has acquired immense importance in the last 50 years. However, as one of law and economics issue, the theoretic researches approximately are traced back to the inaugural studies of McKean's(1970a,b) and Oi's(1973). As viewed from economics, they investigated the products liability under complete information for the first time. Inevitably, it stirred up the aboil discussion among jurisprudents, economists and sociologists, particularly in common law countries. By the studies of Viscusi's, Priest's, Shavell's, Polinsky's, Posner's, Cooter's, Ulen's etc., the disquisitive ways of the mainstream economics, such as new institution economics, information economics, game theory,the theory of mechanism etc. have been introduced into the studies of product liability, gradually resulted in making assumptions and analytical methods become unambiguous and modified. Ultimately, it makes the studies of product liability become an academic system of logicality. Such researches have indicated, although since the day of naissance product liability's tenet is protecting the benefits of the less infirm consumers relative to manufactures in a modern society; however, as a kind of law which is abided coequally by all members in this society, it inevitably affects the utility of consumers', the investment and innovation of manufacturers', the social welfare and the economic development. Accordingly, the problem of product liability is essentially an incentive problem. As a result, this topic concerned mainly focuses on:(1)What is the connotation of product liability system? Why should it exist, for governing safety, or for prompting innovation, just the same for both? (2)What does the extension of product liability system include, liability law in common law, governmental product safety regulation, and inherent moral standard in certain colony?(3)Following ex-problem, what is the respective function of social organizations, courts and governments?(4)What is the objects of product Liability system governing? Is it product safety, manufacturer, or consumer? (5)For a society, whether does the optimal and most efficient products Liability system exist or not? For different communities, why are product liability systems meeting the same system target different in a thousand and one ways? (6)However, is there the uniform kernel in dissimilar products liability systems? How does it influence on the behavior of every player?Our retrospective literatures and advised current legislation in all countries indicate in spite of diversified standpoints which have been put forward by jurisprudents and economists from various views on the above problems, particularly, after 70's,law economists engaging in studying product liability have tried to provide the standard economic framework for this realm; however, regretfully, at present, existing formal analyses on the subject have largely captured only the research of certain doctrines and discussion of certain bargainer, even when the social welfare is taken into account, it's still absence of comprehensive research of considering both players. Thus, it's necessary to complement those previously framework of analysis, particularly, define clearly different products which different product Liability systems are applied to. Moreover, although the academic discussions about combining liability with regulation have been piled up one after another, but in theory there are distinct viewpoints and short of comprehensive and uniform frame. More importantly, whether law economic research born out of common law can realize "localization" in statute law countries or not. As regards idiographic issues, apparently, it's more pressing to consider the measure problem about seller's liability and the relationship between liability and innovation. As a result, the current researches have not still resolved nicely below problems:(1) With the economic perspective, what's the product liability? How does define the connotation and extension of product liability? Which scopes does it apply to?(2) As viewed from horizontal direction, why had product liability extended from controlling by oneself to governing by private law to redressing by public right; while as viewed from longitudinal direction, why had it evolved from negligence liability to strict liability? What is on earth the internal mechanism and reason? In this process, how had it realized the concordance of every party which is not only compatible, but also adverse? (3)Can the law economic research born out of common law realize "localization" in statute law countries? On the other hand, in all countries in the world, particularly China, the upswing of product Liability in recent years, along with the ambiguous discussion in the jurisprudence, also necessitates the new approaches as opposed to the traditional jurisprudential theories. Even although there is no the excuse to the question the ability of jurisprudence, but facing such social problem, economists also shouldn't keep silence.With above two pending problems, based on the existing literatures, this paper takes up with the research of product Liability' economic logic; and tries to provide a unified framework; then opens out the inherent logicality and law of product liability's extension and evolvement; in the end hopes to discuss primarily whether the law economic research on product liability can realize "localization" in statute law countries or not. According to the assumptions of this paper, product liability systems are not only one of understanding the influence of an exogenous liability system on both the firm's and consumers'optimal choices, but also an issue of endogenously designed contracts between the firms and consumers. As a result, if the system could be treated as a kind of game equilibrium, product liability can be regarded as a set of the rules of game or payoff conditions of cooperative game equilibrium. If the system could be treated as a kind of a incentive mechanism, product liability can be regards as the mechanism which makes the aims among individuals become coincident and information incline towards concentrative by changing individual constraints. In other words, this paper focuses leading attention on historical and realistic analysis of product liability systems; and provides the a unified framework of analyzing the creation and evolvement of product liability; then inquiries how exogenous is product liability in players'game choices under various constraints, and how these systems influence the behaviors of the players'concerned (or change players'constraints). This paper thinks, as a game equilibrium, the extension of product liability systems includes four levels of orders. First is norm of exchange which comes into being among the players according to individual rationality; second is law merchant which is constituted according to maximizing a business domain welfare; third is product liability law which is constituted according to maximizing social welfare; fourth is product liability regulation which is chosen based on certain goals of social development by governors. As a result, this paper intends to study the generic mechanism of product liability systems'evolution under asymmetrical information. Hereinto, the essential logic is:the product market is the system space where there are all kinds of asymmetric information among players; under the restriction of existing change set, proceeding from considering own benefit individuals can voluntarily develop all kinds of measures and systems in order to remedying information asymmetry, thus can create the inherent requirement of norms of exchange, law merchant and product liability law which is compelling to third-party and has the function of private relief. But, the existence of litigation costs, third-party' imperfect information, and particular goals of social development further makes individuals gradually choose ex ante product liability regulation as the complement of ex post product liability law. Then the accumulating effects of regulation further impact the alteration of private law To be brief, this is a process of rotative evolution-"from out of equilibrium under incomplete information to equilibrium after remedying information, then to new off-equilibrium under incomplete information". In other words, this paper provides a complete characterization of product liability systems, and the analysis is mainly undertaken in a partial-equilibrium framework.Hence, this paper engages in expatiation by dividing third parts:a) Part I is constitute by chapterâ… , chapterâ…¡and chapterâ…¢.Tt endeavors to clarify the issues concerned, and summarize the practical background and theoretical foundation, then point out the dominating problem which this paper will account for derived from the critics on contribution of existing documentaries. Starting off the motive and sense of this research, based on definitely defining concerned concepts, chapter I puts forward that the background of this study is real world where there is asymmetric information; then further shows the research methods, framework and different counts comparing with the former frameworks of studies about product liability system. Expatiating on the history and praxis of product liability system and making the literature concerned review and animadvert on are presented respectively in chapter II and chapterâ…¢.b) As a central feature of this part of this paper, Part II includes chapter IV, chapter V, chapter VI and chapterâ…¦.Surrounding the information asymmetry problem and along the logistic path of this study, Part II establishes some standard economic models to go on theoretic discussion on "norms of exchange-law merchant-product liability law-product liability regulation" by degrees, in order to carry out that the theory is close to praxis inch by inch. Based a set of supposes, this paper bring forward a new research view:there are games between manufacturer and consumer in chapter IV. And a model of "norms of exchange" between manufacturer and consumer is established in chapter V, which describes a kind of mechanism forming a endogenetic liability system--"norms of exchange" without considering any third-party's compulsion (law merchant,court or government). Further, the possibly optimal "norms of exchange", corresponding incentive compatibility constraints, utility (or profit) functions of both players'and social welfare function also are sketched. Chapter V goes on indicate that it's sub-optimal for "norms of exchange" to govern liability in practice, so it will result in the demand for third-party governance mechanism. Having educed the conclusions in former chapter, this paper moves on in chapter V to analyze that how the existence of the law merchant and liability law (ex post) -courts in common law-affects utility (or profit) functions of both players'and social welfare function, and work out the optimal path of liability law and corresponding incentive compatibility constraint. Moreover, chapterâ…¥indieates it incarnates the tradeoff between the innovative encouragement of manufacturers and the safety warranty encouragement of consumers'. Eventually, chapterâ…¥also modifies the elementary supposes by considering the feasibilities of the existence of manufacturers who are not able to pay fully for liability and judges who sentence on players'liability by mistake and select "the reasonable person standard" owing to the limited abilities of dealing with information, then deduces the existence of "private law failure" in practice. Chapterâ…¦traces the path of studies in former chapter, further refines some elementary supposes; and chooses ex ante regulation-product safety regulation of governments'as an antidote against "private law failure". Then the author illustrates the complementary equilibrium between liability law and safety regulation; and by establishing the model of designing optimal product liability systems discusses whether there is an equilibrium solution or not. Eventually, in order to consummate the analysis in partâ…¡, the paper further points that in theory owing to the possibility of the existence of regulators who only have incomplete information and are bribed; it's possible to produce "public law failure". To summarize, the research results of partâ…¡express that, the optimal path of product liability system, which involves in many players and is decided endogeneticly by inherent change set in certain colony,is the same as "the equilibrium on a blade", so it is very hard to arrive. However, combining norms of exchange, product liability law and product liability regulation redounds to reducing difference between second-best system and best solution, furthermore, the path of evolving is possibly convergent. And these government mechanisms make up of complementary whole, in order to control efficiently risk.c)Finally, as the conclusions of this paper, partâ…¢chapterâ…§, sums up the central analytical outcomes in front. Then this paper closes with some shortages of this research, and some suggested extension.
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