Costly Litigation and Optimal Damages

A. Mitchell Polinsky () and Steven Shavell ()

No 18594, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the influence of litigation costs on the optimal level of damages, assuming that litigation costs rise with the level of damages.

JEL-codes: K13 K41 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-law, nep-mic and nep-reg
Note: LE
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Published as International Review of Law and Economics Volume 37, March 2014, Pages 86–89 Cover image Costly litigation and optimal damages A. Mitchell Polinskya, 1, Steven Shavellb, 1,

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Journal Article: Costly litigation and optimal damages (2014)
Working Paper: Costly Litigation and Optimal Damages (2012)
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