Common law efficiency when joinder and class actions fail as aggregation devices

Frank Fagan () and Urmee Khan
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Frank Fagan: EDHEC Business School
Urmee Khan: University of California

European Journal of Law and Economics, 2019, vol. 47, issue 1, No 1, 14 pages

Abstract: Abstract We develop a litigant-based model of rule selection where parties choose to litigate rules that are efficient between two parties, but inefficient as between a potential class or potentially joined litigants and a counter-party. Collective action problems lead to incomplete party formation, which generates continuous litigation of seemingly efficient rules. By accounting for externalities borne by non-parties, we show that rules which are allocatively efficient across both parties and non-parties are evolutionary stable for any given judicial ideology or judicial preference for prestige, thus preserving the explanatory power of the Efficiency of Common Law Hypothesis.

Keywords: Efficient common law hypothesis; Joinder; Class actions; Baconian judges; K13; K15; K41 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s10657-018-9604-9

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