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Advocatus, et non latro? Testing the supplier-induced demand hypothesis for Italian courts of justice

  • Paolo Buonanno
  • Matteo M. Galizzi

We explore the relationship between litigation rates and the number of lawyers, in a typical supplier-induced demand (SID) frame. Drawing on an original panel dataset for the 169 Italian courts of justice between 2000 and 2007, we first document that the number of lawyers is positively correlated with different measures of litigation rate. Then, using an instrumental variables strategy we find that a 10 percent increase of lawyers over population is associated with an increase between 1.6 to 6 percent in civil litigation rates. Thus our empirical analysis supports the SID hypothesis for the Italian lawyers: following an increase in their relative number, lawyers may exploit their informational advantage to induce clients to access to courts even when litigation is unnecessary or ineffective.

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Paper provided by University of Brescia, Department of Economics in its series Working Papers with number 0914.

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Date of creation: 2009
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Handle: RePEc:ubs:wpaper:0914
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