Investigation into the crashes of Boeing 737 Max planes has revealed that the actual task of airworthiness certification was made by Boeing employees rather than government inspectors. Does such corporate self‐certification sufficiently protect consumers? Let me first introduce some general claims about safety, markets and regulation before addressing the question of administrative delegation.
How safe should products be? People’s preferences about risk vary. Some people are risk averse and others are not. Some people would refrain from using a drug until it has undergone clinical trials, while others would simply accept recommendations from friends and relatives.
Markets can accommodate all these possibilities simultaneously. One firm can sell something with evidence of safety, while other firms can offer things for sale without such evidence. Underwriters Laboratories and kosher certification are examples of the private provision of evidence of quality. Consumers can choose the combination of price and safety that they prefer.