IDEAS home Printed from https://ideas.repec.org/a/bpj/rlecon/v7y2011i2n6.html
   My bibliography  Save this article

Class Actions, Compliance and Moral Cost

Author

Listed:
  • Deffains Bruno

    (University of Paris II, EBS University, Wiesbaden)

  • Demougin Dominique

    (University of Paris II, EBS University, Wiesbaden)

Abstract

We study the effects of introducing class action lawsuits into a competitive environment where some firms have an intrinsic motivation to implement efficient care. The standard aggregation argument in favor of class action holds that there will be increasing efficiency due to lower litigation costs. In the short run, intrinsically motivated firms benefit from the introduction of a class action procedure. In the long run, new intrinsically motivated entrants are attracted into the market, thereby increasing consumer surplus. Overall, the average care level increases.

Suggested Citation

  • Deffains Bruno & Demougin Dominique, 2011. "Class Actions, Compliance and Moral Cost," Review of Law & Economics, De Gruyter, vol. 7(2), pages 481-500, December.
    • Handle: RePEc:bpj:rlecon:v:7:y:2011:i:2:n:6
    DOI: 10.2202/1555-5879.1540
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1555-5879.1540
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1555-5879.1540?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
    2. Marceau, Nicolas & Mongrain, Steeve, 2003. "Damage averaging and the formation of class action suits," International Review of Law and Economics, Elsevier, vol. 23(1), pages 63-74, March.
    3. Marta Cenini & Barbara Luppi & Francesco Parisi, 2011. "Incentive effects of class actions and punitive damages under alternative procedural regimes," European Journal of Law and Economics, Springer, vol. 32(2), pages 229-240, October.
    4. Bruno S. Frey & Reto Jegen, 2001. "Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
    5. Lai, Ching-Chong & Yang, Chih-Yu & Chang, Juin-Jen, 2003. "Environmental Regulations and Social Norms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(1), pages 63-75, January.
    6. Bruno Deffains & Claude Fluet, 2013. "Legal Liability when Individuals Have Moral Concerns," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(4), pages 930-955, August.
    7. Deffains, Bruno & Langlais, Eric, 2007. "Informational externalities and informational sharing in class action suits," MPRA Paper 4846, University Library of Munich, Germany.
    8. Avinash Dixit, 2009. "Governance Institutions and Economic Activity," American Economic Review, American Economic Association, vol. 99(1), pages 5-24, March.
    9. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    10. Jürgen G. Backhaus & Alberto Cassone & Giovanni B. Ramello (ed.), 2012. "The Law and Economics of Class Actions in Europe," Books, Edward Elgar Publishing, number 13070.
    11. Alon Klement, 2004. "Incentive Structures for Class Action Lawyers," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 20(1), pages 102-124, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Florian Baumann & Tim Friehe, 2017. "On Adverse Effects of Consumers’ Attaching Greater Importance to Firms’ Ethical Conduct," Games, MDPI, vol. 8(3), pages 1-7, September.
    2. Florian Baumann & Tim Friehe & Inga Hillesheim, 2015. "Status and Liability," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 171(2), pages 285-307, June.
    3. Christoph Rössler & Tim Friehe, 2020. "Liability, morality, and image concerns in product accidents with third parties," European Journal of Law and Economics, Springer, vol. 50(2), pages 295-312, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tor Helge Holmås & Egil Kjerstad & Hilde Lurås & Odd Rune Straume, 2008. "Does monetary punishment crowd out pro-social motivation? The case of hospital bed-blocking," NIPE Working Papers 17/2008, NIPE - Universidade do Minho.
    2. Dickinson, David & Villeval, Marie-Claire, 2008. "Does monitoring decrease work effort?: The complementarity between agency and crowding-out theories," Games and Economic Behavior, Elsevier, vol. 63(1), pages 56-76, May.
    3. Gauguier, Jean-Jacques, 2009. "L’industrialisation de l’Open Source," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/4388 edited by Toledano, Joëlle.
    4. Ramm, Joachim & Tjøtta, Sigve & Torsvik, Gaute, 2013. "Incentives and creativity in groups," Working Papers in Economics 06/13, University of Bergen, Department of Economics.
    5. Cecere, Grazia & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Waste prevention and social preferences: the role of intrinsic and extrinsic motivations," Ecological Economics, Elsevier, vol. 107(C), pages 163-176.
    6. Charles Ayoubi & Boris Thurm, 2023. "Knowledge diffusion and morality: Why do we freely share valuable information with Strangers?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 75-99, January.
    7. Pokorny, Kathrin, 2008. "Pay--but do not pay too much: An experimental study on the impact of incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 251-264, May.
    8. Lindeboom, Maarten & van der Klaauw, Bas & Vriend, Sandra, 2015. "The effect of audit regimes on applications for long-term care," CEPR Discussion Papers 10572, C.E.P.R. Discussion Papers.
    9. Adams, Renée B. & Ferreira, Daniel, 2008. "Do directors perform for pay?," Journal of Accounting and Economics, Elsevier, vol. 46(1), pages 154-171, September.
    10. Newman, George E. & Jeremy Shen, Y., 2012. "The counterintuitive effects of thank-you gifts on charitable giving," Journal of Economic Psychology, Elsevier, vol. 33(5), pages 973-983.
    11. Servátka, Maroš & Tucker, Steven & Vadovič, Radovan, 2011. "Words speak louder than money," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 700-709.
    12. Mikel Berdud & Juan M. Cabasés Hita & Jorge Nieto, 2012. "Motivational Capital and Incentives in Health Care Organisations," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1209, Departamento de Economía - Universidad Pública de Navarra.
    13. Bartoš, Vojtěch & Levely, Ian, 2021. "Sanctioning and trustworthiness across ethnic groups: Experimental evidence from Afghanistan," Journal of Public Economics, Elsevier, vol. 194(C).
    14. Armin Falk & Michael Kosfeld, "undated". "Distrust - The Hidden Cost of Control," IEW - Working Papers 193, Institute for Empirical Research in Economics - University of Zurich.
    15. Cranford, Matthew & Mourato, Susana, 2014. "Credit-Based Payments for Ecosystem Services: Evidence from a Choice Experiment in Ecuador," World Development, Elsevier, vol. 64(C), pages 503-520.
    16. Etilé, Fabrice & Teyssier, Sabrina, 2013. "Corporate social responsibility and the economics of consumer social responsibility," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 94(2).
    17. Jason Delaney & Sarah Jacobson, 2016. "Payments or Persuasion: Common Pool Resource Management with Price and Non-price Measures," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 747-772, December.
    18. Alberto Cassone & Giovanni Ramello, 2011. "The simple economics of class action: private provision of club and public goods," European Journal of Law and Economics, Springer, vol. 32(2), pages 205-224, October.
    19. Danz, David & Engelmann, Dirk & Kübler, Dorothea, 2022. "Do legal standards affect ethical concerns of consumers?," European Economic Review, Elsevier, vol. 144(C).
    20. Kurz, Konstantin & Bock, Carolin & Knodt, Michèle & Stöckl, Anna, 2022. "A Friend in Need Is a Friend Indeed? Analysis of the Willingness to Share Self-Produced Electricity During a Long-lasting Power Outage," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 136773, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:rlecon:v:7:y:2011:i:2:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.