The Quest for Product Safety in the Context of 3D Printing: A Law and Economics Analysis

The trend of digitalisation in recent years has an increasing influence on every aspect of our society. In the domain of production, with the adoption of 3D printing, a product now can be directly fabricated from a CAD file. This transformation not only lowers the threshold of production, thus enabling ordinary people to engage in production activities, but also drives consumers to take a proactive role in directing the process of production by serving as the coordinators between CAD file designers and object fabricators. The transformation that 3D printing has caused is challenging the incumbent legal regime, which is significantly affected by traditional mass production. This research offers a law and economics explanation for the trade-offs involving the value added and risk generated by 3D printing. It explores the extent to which various legal instruments could be organised to maximise social welfare considering the risk generated by 3D printing. The thesis further provides some implications for the EU legislative framework of the digital single market in the context of 3D printing. One of the main instruments to deal with product risk is contractual relation. The socially optimal outcome is achieved provided that consumers can communicate smoothly with CAD file designers or fabricators smoothly and that they have a solid understanding of safety information. This thesis explains that under specific business models, contracting over product risk fails to provide contractual parties with optimal incentives. Contracting over product risk is not an efficient instrument in the scenario where consumers obtain a CAD file from an open-source platform and then have a non-professional print the file. In contrast, when production is organised in a way characterised by customisation, contractual parties will be induced to behave more appropriately. This thesis further shifts to examine the efficiency of tort liability in the context of 3D printing. Tort liability targets producers in the scenario of traditional mass production. Since producers are considered to be the party who can reduce accidents at the lowest cost and who have the capacity to spread the losses, they are required to bear the residual liability and are thus exposed to strict liability. In the context of 3D printing, in a situation where digital designing and physical fabrication are accomplished by a single entity (i.e. under the so-called “one-stop business model”), applying strict liability might still be desirable. In contrast, for most other business models (i.e. production organised in the so-called “separation models”), because accidents are not unilateral - which means that CAD file designers, fabricators and even consumers may contribute to the damage - it is difficult to define the most suitable party who can efficiently reduce accidents and spread losses. Therefore, the analysis in this thesis indicates that the expansion of strict liability shall not be encouraged. Other legal instruments assessed in this thesis are regulations and platform governance. Information regulations shall be encouraged in the context of 3D printing, because they could reduce information asymmetry to some extent and thus improve the decision-making of stakeholders. In comparison, due to the prohibitive administrative cost, the use of mandatory standards and prior approval shall be limited to specific areas, such as the medical and mechanical sectors. In addition, platform governance as a new instrument will play an increasingly important role in the digital age with respect to deterrence and risk-shifting. It is noted that, to promote the governance of platforms, legal instruments shall be developed in a way of providing platforms with additional incentives to behave appropriately.