I would like to tile my front porch steps and have been shopping. Lowe's and Home Depot have plenty of tile but although they advertise installation they won't install it outdoors. The salespeople, however, will surreptitiously recommend small family contractors. Call Jose, they tell me handing me a number. Why won't the big firms install outdoor tile?
As best as I can figure the answer is liability. A few slips, falls and an enterprising lawyer or two and Lowe's could be out millions of dollars. The revenues aren't worth the risk so small firms step into the breach. The key, of course, is that the small firms won't be sued because they are judgment proof.
Friday, March 21, 2008
Liability Law and Firm Size
Alex Tabarrok finds an example of law and economics in action: