Data and Code for: Product Liability Litigation and Innovation: Evidence from Medical Devices

We study the impact of product liability litigation on new product introductions by leading medical device firms. We find that the defendant firms, and other firms to a lesser extent, reduce their propensity to introduce new products in the litigated product categories during litigation years. We also show how changes to two features of safety regulation---(1) the availability of public information regarding adverse events and (2) federal law taking precedence over state law---influence the likelihood of litigation. These regulatory changes also provide quasi-exogenous variations in litigation and confirm our main finding. Lastly, we show that the potential welfare loss due to litigation appears relatively contained: the decline in new product introductions is not permanent; it does not spill over beyond the litigated categories or to patenting activities, which proxy for early-stage R\&D investment; and, importantly, litigation appears to induce firms to develop safer devices. Our study contributes new evidence to the policy debate over how product liability might affect innovation, and shows that safety regulation affects the functioning of the liability regime in significant ways.