Is car safety too expensive ?
General Motors has announced the recall of more than 2 million vehicles for safety reasons. This brings the total number of cars recalled by the manufacturer to more than 13 million in the United States in the past year, more than the total production of GM in 2013! The reasons for this latest recall: potential problems with seat belts, transmissions and air bags. The company is under pressure to strengthen its standards for automotive safety.
Is this due to excessive regulation ?
A team from the University of Hamburg investigated the effect of safety regulations on the car industry and the economy in general. Their study shows the effects of “positive externalities” of these regulations on the economy. In other words, the economic benefits derived from eg ABS or ESP (electronic trajectory control) systems outweigh the costs associated with these automotive safety systems.
Not sure GM will agree …