MARKET FORCES AND AIRCRAFT SAFETY AN EXTENSION
- 1 April 1989
- journal article
- Published by Wiley in Economic Inquiry
- Vol. 27 (2) , 345-354
- https://doi.org/10.1111/j.1465-7295.1989.tb00786.x
Abstract
Recent work by Chalk focuses on whether market forces provide safe products via stock market reaction to unanticipated events. Chalk finds a $200 million decline in McDonnell Douglas stockholder wealth related to the 1979 DC‐10 crash in Chicago. That decline far exceeds reasonable estimates of regulatory and liability costs, suggesting a market penalty for unsafe products. His results, however, do not seem consistent with the notion of efficient markets, as American Airlines maintenance procedures were quickly identified as the likely cause of the crash. This study finds no resulting shareholder wealth loss for American Airlines or McDonnell Douglas.Keywords
This publication has 3 references indexed in Scilit:
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- MARKET FORCES AND AIRCRAFT SAFETY: THECASEOFTHEDC‐10Economic Inquiry, 1986
- The Impact of Product Recalls on the Wealth of SellersJournal of Political Economy, 1985