Government regulation is supposed to make products safer. But new research shows that, at least for medical devices, regulation can have the opposite effect.
In a paper published this past November, UC San Diego economist Parker Rogers found that when the U.S. Food and Drug Administration reduces regulation on a category of products, innovation and competition in that category increase, prices decrease, and safety actually improves.
How could this be? Rogers hypothesized that firms “increas[e] their emphasis on product safety as deregulation exposes them to more litigation.”