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Shifting Plaintiffs' Fees versus Increasing Damage Awards

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  • Louis Kaplow

Abstract

Shifting victorious plaintiffs' fees to defendants and increasing damage awards are alternative ways to achieve similar results: increasing plaintiffs' incentives to sue and raising defendants' expected payments. This article shows that relying on higher damage awards is more efficient than shifting plaintiffs' fees. The reason is that fee shifting is more valuable for plaintiffs with higher litigation costs. Thus, it is possible to substitute higher damage awards for fee shifting in a manner that leaves deterrence unaffected while eliminating the suits of plaintiffs with the highest litigation costs.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 24 (1993)
Issue (Month): 4 (Winter)
Pages: 625-630

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Handle: RePEc:rje:randje:v:24:y:1993:i:winter:p:625-630

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  1. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," NBER Working Papers 3634, National Bureau of Economic Research, Inc.
  2. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 76, pages 169.
  3. Katz, Avery, 1987. "Measuring the Demand for Litigation: Is the English Rule Really Cheaper?," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 3(2), pages 143-76, Fall.
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Cited by:
  1. Éric Langlais, 2008. "Indemnisation des préjudices et fréquence des procès en présence d'une asymétrie d'information sur l'aversion au risque des parties," Recherches économiques de Louvain, De Boeck Université, De Boeck Université, vol. 74(2), pages 191-218.
  2. Beckner, Clinton III & Katz, Avery, 1995. "The incentive effects of litigation fee shifting when legal standards are uncertain," International Review of Law and Economics, Elsevier, Elsevier, vol. 15(2), pages 205-224, June.
  3. Chopard, Bertrand & Cortade, Thomas & Langlais, Eric, 2008. "Trial and settlement negotiations between asymmetrically skilled parties," MPRA Paper 8995, University Library of Munich, Germany.
  4. Jean O. Lanjouw & Mark Schankerman, 1997. "Stylized Facts of Patent Litigation: Value, Scope and Ownership," NBER Working Papers 6297, National Bureau of Economic Research, Inc.
  5. Osborne, Evan, 1999. "Who should be worried about asymmetric information in litigation?," International Review of Law and Economics, Elsevier, Elsevier, vol. 19(3), pages 399-409, September.
  6. Kathryn Zeiler, . "Medical Malpractice and Contract Disclosure: An Equilibrium Model of the Effects of Legal Rules on Behavior in Health Care Markets," American Law & Economics Association Annual Meetings, American Law & Economics Association 1071, American Law & Economics Association.
  7. Jean Olson Lanjouw & Mark Schankerman, 1998. "Stylised Fact of Patent Litigation: Value, Scope and Ownership," STICERD - Economics of Industry Papers, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE 20, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  8. McAfee, R. Preston & Mialon, Hugo M. & Mialon, Sue H., 2008. "Private v. public antitrust enforcement: A strategic analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 92(10-11), pages 1863-1875, October.

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