NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Risk-Mitigating Technologies: the Case of Radiation Diagnostic Devices

Alberto Galasso, Hong Luo

NBER Working Paper No. 26305
Issued in September 2019
NBER Program(s):Law and Economics Program, Productivity, Innovation, and Entrepreneurship Program

We study the impact of consumers’ risk perception on firm innovation. Our analysis exploits a major surge in the perceived risk of radiation diagnostic devices, following extensive media coverage of a set of over-radiation accidents involving CT scanners in late 2009. Difference-in-differences regressions using data on patents and FDA product clearances show that the increased perception of radiation risk spurred the development of new technologies that mitigated such risk and led to a greater number of new products. We provide qualitative evidence and describe patterns of equipment usage and upgrade that are consistent with this mechanism. Our analysis suggests that changes in risk perception can be an important driver of innovation and can shape the direction of technological progress.

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Document Object Identifier (DOI): 10.3386/w26305

 
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