The Revised Product Liability Directive: A Law and Economics Analysis

On 12 March 2024, the European Parliament adopted the text for revising the current Product Liability Directive (revised PLD), which was implemented in 1985. The revised PLD adapted the rules for the damage caused by defective products for the challenges from digitalisation, the circular economy and international supply chains. In particular, the new rules aim to ensure that new technologies, such as AI, could be well reflected, so that residents in the European Union could be effectively protected. Conventionally, a law and economics analysis has played a crucial role in shaping product liability. The objective of this paper is to discuss the major changes in the revised PLD via the lens of insights of law and economics. In specific, we focus on the influence of these changes on multiple key elements, including deterrence effect, risk-shifting and local preferences.