'Necessary Costs' and the Incentive of the English Rule
AbstractThe English rule of court cost allocation only allows costs that are deemed to be 'necessary' or 'proper' for the attainment of justice to be shifted from the winner to the loser at trial. We model litigants who optimize with respect to the level of legal inuts they use, and compare the incentive effects of such a rule against the standard representation of the English rule, wherein all costs are assumed to be transferred from the winner to the loser. We show that the incentive to file suit, to settle before going to trial, and to spend resources on litigation if settlement is not reached can be higher or lower for risk neutral litigants than is predicted by the stylized English rule. Lastely, we show that litigation expenditure is affected by the degree of uncertainty (risk-neutral) litigants face regarding the level of necessary costs. Thus, under the English rule, courts affect litigants' incentives through the precision with which they define necessary costs.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 643.
Length: 22 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
Phone: +61 3 8344 5289
Fax: +61 3 8344 6899
Web page: http://www.economics.unimelb.edu.au
More information through EDIRC
Find related papers by JEL classification:
- K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marisa Cerantola).
If references are entirely missing, you can add them using this form.