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Environmental conflicts with reimbursement: experimental evidence

Author

Listed:
  • Todd L Cherry

    (Dept of Economics, Appalachian St Univ; CICERO Center for Intl Climate & Environmental Research-Oslo)

  • Stephen J Cotten

    (Department of Economics and Finance, University of Houston - Clear Lake)

Abstract

Most environmental laws, such as the Clean Water Act, Clean Air Act and Endangered Species Act, include provisions that encourage private enforcement by empowering citizens and NGOs to file suit against negligent firms and government agencies. One element of these ‘citizen suits' is that the citizens' legal costs are reimbursed if they win, while those of a winning firm or agency are not. This paper follows previous theoretical work with an experimental investigation of alternative reimbursement rules, including the asymmetric reimbursement structure prescribed in many U.S. environmental laws. Results suggest that reimbursement increases the social cost of enforcement, and in the case of asymmetric reimbursement, the increased cost falls disproportionately upon the defending firm or government agency.

Suggested Citation

  • Todd L Cherry & Stephen J Cotten, 2012. "Environmental conflicts with reimbursement: experimental evidence," Economics Bulletin, AccessEcon, vol. 32(4), pages 3224-3232.
    • Handle: RePEc:ebl:ecbull:eb-12-00713
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I4-P309.pdf
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    References listed on IDEAS

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    1. Michael R. Baye & Dan Kovenock & Casper G. Vries, 2005. "Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach," Economic Journal, Royal Economic Society, vol. 115(505), pages 583-601, July.
    2. Baik Kyung Hwan & Shogren Jason F., 1994. "Environmental Conflicts with Reimbursement for Citizen Suits," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 1-20, July.
    3. Snyder, Edward A & Hughes, James W, 1990. "The English Rule for Allocating Legal Costs: Evidence Confronts Theory," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 345-380, Fall.
    4. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-1097, September.
    5. Katz, Avery, 1987. "Measuring the Demand for Litigation: Is the English Rule Really Cheaper?," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 3(2), pages 143-176, Fall.
    6. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-898, December.
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    Cited by:

    1. Sung-Hoon Park & Chad Settle, 2022. "Internalizing environmental damages and endogenous reimbursement in environmental conflicts: a game-theoretic analysis," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(4), pages 547-569, December.
    2. Sung-Hoon Park & Chad E. Settle, 2023. "Asymmetric Reimbursement and Contingent Fees in Environmental Conflicts: Observable vs. Unobservable Contracts," Games, MDPI, vol. 14(4), pages 1-10, July.

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    More about this item

    Keywords

    conflict; reimbursement; experiments;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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