Litigation and the Product Rule: A Rent Seeking Approach

Jef De Mot and Thomas Miceli
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Jef De Mot: University of Ghent

No 2015-13, Working papers from University of Connecticut, Department of Economics

Abstract: This paper examines the suppression of the product rule in litigation from a rent seeking perspective. We show that there are some important arguments in favor of not applying the product rule. First, only when the product rule is suppressed is the plaintiff's equilibrium probability of winning equal to the product of the inherent quality of the several issues at stake. The probability of winning is always lower when the product rule is used, and this is especially so for relatively strong cases. Second, for many of the weakest cases, the expected value of the plaintiff is larger when the product rule is used. Third, for relatively strong cases, the litigation expenditures are typically larger when the product rule is used. This further decreases the plaintiff's expected value for strong cases.

Keywords: product rule; litigation costs; rent seeking (search for similar items in EconPapers)
JEL-codes: K13 K41 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2015-10
New Economics Papers: this item is included in nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2015-13

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