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The simple economics of class action: private provision of club and public goods

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  • Alberto Cassone
  • Giovanni Ramello

    ()

Abstract

This article uses economic categories to show how the reorganisation of civil procedure in the case of class action is not merely aimed at providing a more efficient litigation technology, as hierarchies (and company law) might do for other productive activities, but that it also serves to create a well defined economic organization ultimately aimed at producing a set of goods, first and foremost among which are justice and efficiency. Class action has the potential to recreate, in the judicial domain, the same effects that individual interests and motivations, governed by the perfect competition paradigm, bring to the market. Moreover, through economic analysis it is possible to rediscover not only the productive function of this legal machinery, but also that partial compensation of victims and large profits for the class counsel, far from being a side-effect, are actually a necessary condition for reallocation of the costs and risks associated with the legal action.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10657-011-9254-7
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Bibliographic Info

Article provided by Springer in its journal European Journal of Law and Economics.

Volume (Year): 32 (2011)
Issue (Month): 2 (October)
Pages: 205-224

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Handle: RePEc:kap:ejlwec:v:32:y:2011:i:2:p:205-224

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Web page: http://www.springerlink.com/link.asp?id=100264

Related research

Keywords: Class action; Collective litigation; Mass tort; Club; Liability; Deterrence; K41; D71; D74; K13; H41;

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References

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  1. Juergen Backhaus, 2011. "The law firm as an investment bank in class actions," European Journal of Law and Economics, Springer, vol. 32(2), pages 225-228, October.
  2. Giovanni Ramello, 2011. "Property rights and externalities: the uneasy case of knowledge," European Journal of Law and Economics, Springer, vol. 31(1), pages 123-141, February.
  3. Thomas Ulen, 2011. "An introduction to the law and economics of class action litigation," European Journal of Law and Economics, Springer, vol. 32(2), pages 185-203, October.
  4. 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.
  5. Gallini, Nancy, 2010. "Private Agreements for Coordinating Patent Rights: The Case of Patent Pools," UBC Departmental Archives nancy_gallini-2010-34, UBC Department of Economics, revised 17 Nov 2010.
  6. Edward L. Glaeser & Andrei Shleifer, 2001. "The Rise of the Regulatory State," NBER Working Papers 8650, National Bureau of Economic Research, Inc.
  7. Sophie Harnay & Alain Marciano, 2011. "Seeking rents through class actions and legislative lobbying: a comparison," European Journal of Law and Economics, Springer, vol. 32(2), pages 293-304, October.
  8. Antonio Nicita & Giovanni B. Ramello, 2007. "Property, Liability and Market Power: The Antitrust Side of Copyright," Review of Law & Economics, De Gruyter, vol. 3(3), pages 7.
  9. Alon Klement, 2004. "Incentive Structures for Class Action Lawyers," Journal of Law, Economics and Organization, Oxford University Press, vol. 20(1), pages 102-124, April.
  10. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185.
  11. Boyd, James, 2001. "Financial Responsibility for Environmental Obligations: Are Bonding and Assurance Rules Fulfilling Their Promise?," Discussion Papers dp-01-42, Resources For the Future.
  12. Dana, James D, Jr & Spier, Kathryn E, 1993. "Expertise and Contingent Fees: The Role of Asymmetric Information in Attorney Compensation," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(2), pages 349-67, October.
  13. Giovanni B. Ramello, 2011. "Property Rights and Externalities: The Uneasy Case of Knowledge," ICER Working Papers 02-2011, ICER - International Centre for Economic Research.
  14. Donatella Porrini & Giovanni B. Ramello, 2011. "Class action and financial markets: insights from law and economics," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 3(2), pages 140-160, July.
  15. Lorenzo Sacconi, 2011. "The case against lawyers’ contingent fees and the misapplication of principal-agent models," European Journal of Law and Economics, Springer, vol. 32(2), pages 263-292, October.
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Citations

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Cited by:
  1. Sophie Harnay & Alain Marciano, 2011. "Seeking rents through class actions and legislative lobbying: a comparison," European Journal of Law and Economics, Springer, vol. 32(2), pages 293-304, October.
  2. Ramello, Giovanni B. & Porrini, Donatella, 2010. "Class action and financial markets: Insights from law and economics," POLIS Working Papers 143, Institute of Public Policy and Public Choice - POLIS.
  3. Thomas Ulen, 2011. "An introduction to the law and economics of class action litigation," European Journal of Law and Economics, Springer, vol. 32(2), pages 185-203, October.
  4. 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.
  5. Juergen Backhaus & Alberto Cassone & Giovanni Ramello, 2011. "The law and economics of class actions," European Journal of Law and Economics, Springer, vol. 32(2), pages 165-168, October.
  6. Lorenzo Sacconi, 2011. "The case against lawyers’ contingent fees and the misapplication of principal-agent models," European Journal of Law and Economics, Springer, vol. 32(2), pages 263-292, October.
  7. Ramello, Giovanni B., 2012. "Aggregate Litigation and Regulatory Innovation: Another View of Judicial Efficiency," IEL Working Papers 8, Institute of Public Policy and Public Choice - POLIS.

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