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Aggregate litigation and regulatory innovation: Another view of judicial efficiency

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  • Ramello, Giovanni B.

Abstract

In this article, we argue that aggregate litigation and the court system can not only restore the protection of victims and the production of deterrence, but also play a pivotal role in stimulating regulatory innovation. This is accomplished through a reward system that seems largely to mimic the institutional devices used in other domains, such as intellectual property rights, by defining a proper set of incentives. Precisely the described solution relies on creating a specific economic framework able to foster economies of scale and grant a valuable property right over a specific litigation to an entrepreneurial individual, who in exchange provides the venture capital needed for the legal action, and produces inputs and focal points for amending regulations. In this light, aggregate litigation thus can be equally seen as an incubator for regulation.

Suggested Citation

  • Ramello, Giovanni B., 2012. "Aggregate litigation and regulatory innovation: Another view of judicial efficiency," International Review of Law and Economics, Elsevier, vol. 32(1), pages 63-71.
  • Handle: RePEc:eee:irlaec:v:32:y:2012:i:1:p:63-71
    DOI: 10.1016/j.irle.2011.12.009
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    References listed on IDEAS

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    Cited by:

    1. Pavel Kuchař, 2016. "Entrepreneurship and institutional change," Journal of Evolutionary Economics, Springer, vol. 26(2), pages 349-379, May.

    More about this item

    Keywords

    Aggregate litigation; Efficiency; Market for risk; Hierarchy; Regulation; Innovation; Asbestos;

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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