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An economic analysis of consumer class actions in regulated industries


  • Ingo Vogelsang


  • Nishal Ramphal


  • Stephen Carroll


  • Nicholas Pace



Regulation and consumer class actions can complement, duplicate, or oppose each other, depending, among others, on the leanings of regulatory objective functions towards the industry or consumers. In particular, pro-consumer regulators would like to see consumers benefit from class actions while pro-industry regulators would like to prevent regulated firms from being harmed by them. However, because pro-consumer regulators are already doing their best for consumers and pro-industry regulators their best for firms, they are both usually constrained in their policies. The result is that class actions tend to be less efficient under pro-consumer regulators and more efficient under pro-industry regulators. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Ingo Vogelsang & Nishal Ramphal & Stephen Carroll & Nicholas Pace, 2007. "An economic analysis of consumer class actions in regulated industries," Journal of Regulatory Economics, Springer, vol. 32(1), pages 87-104, August.
  • Handle: RePEc:kap:regeco:v:32:y:2007:i:1:p:87-104
    DOI: 10.1007/s11149-007-9027-y

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    References listed on IDEAS

    1. Thomas W. Ross, 1984. "Uncovering Regulators' Social Welfare Weights," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 152-155, Spring.
    2. Schmitz, Patrick W., 2000. "On the joint use of liability and safety regulation," International Review of Law and Economics, Elsevier, vol. 20(3), pages 371-382, September.
    3. Kolstad, Charles D & Ulen, Thomas S & Johnson, Gary V, 1990. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements?," American Economic Review, American Economic Association, vol. 80(4), pages 888-901, September.
    4. Shavell, Steven, 1997. "The Fundamental Divergence between the Private and the Social Motive to Use the Legal System," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 575-612, June.
    5. Gupta, Atul & LeCompte, Richard L. B. & Misra, Lalatendu, 1997. "Acquisitions of solvent thrifts: Wealth effects and managerial motivations," Journal of Banking & Finance, Elsevier, vol. 21(10), pages 1431-1450, October.
    6. Aino Halinen, 1999. "From Dyadic Change to Changing Business Networks: An Analytical Framework," Journal of Management Studies, Wiley Blackwell, vol. 36(6), pages 779-794, November.
    7. 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.
    8. Che, Yeon-Koo, 1996. "Equilibrium formation of class action suits," Journal of Public Economics, Elsevier, vol. 62(3), pages 339-361, November.
    9. Peltzman, Sam, 1976. "Toward a More General Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 211-240, August.
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    More about this item


    Class action; Insurance regulation; Price regulation; Legal costs; Compensation; K13; K23; K41; L51;

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation


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