Do Risks and Recall Costs Affect Manufacturers' Tire, Child Seatbelt, and Equipment Recall Decisions?
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This paper investigates the determinants of the risks and recall costs of defective automobile parts on manufacturers' recall decisions. It focuses on non-vehicle recalls, such as for tires, child seatbelts, and equipment. We address two research questions. First, do recalls with high costs have longer pre-recall periods? Second, how do vehicle manufacturers respond to hazards from defective parts? We find evidence that the more costly a recall is, the longer its pre-recall period. Tire recalls generally have shorter pre-recall periods, but when they are costly, they have longer ones. Finally, we find that if a defect may lead to death in accidents, its pre-recall period is shorter. Since making the periods shorter implies fewer defective automobiles on the roads, it is important to develop more effective regulations causing manufacturers to reduce pre-recall periods.
Abstract
This paper investigates the determinants of the risks and recall costs of defective automobile parts on manufacturers' recall decisions. It focuses on non-vehicle recalls, such as for tires, child seatbelts, and equipment. We address two research questions. First, do recalls with high costs have longer pre-recall periods? Second, how do vehicle manufacturers respond to hazards from defective parts? We find evidence that the more costly a recall is, the longer its pre-recall period. Tire recalls generally have shorter pre-recall periods, but when they are costly, they have longer ones. Finally, we find that if a defect may lead to death in accidents, its pre-recall period is shorter. Since making the periods shorter implies fewer defective automobiles on the roads, it is important to develop more effective regulations causing manufacturers to reduce pre-recall periods.
참고문헌 (30)
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