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The Simple Economics of Class Action: Private Provision of Club and Public GoodsAlberto CassoneUniversity of Eastern Piedmont -A. Avogadro - Department of Public Policy and Public Choice Giovanni Battista RamelloUniversity of Piemonte Orientale - A. Avogadro - Department of Public Policy and Public Choice; International Centre for Economic Research (ICER) June 1, 2011 Forthcoming, European Journal of Law and Economics, 32:205–224 ICER Working Paper No. 6/2011 Abstract: This article uses economic categories to show how the reorganization of civil procedure in the case of class action is not merely aimed at providing a more efficient litigation technology, as hierarchies (and company law) might do for other productive activities, but that it also serves to create a well defined economic organization ultimately aimed at producing a set of goods, first and foremost among which are justice and efficiency. Class action has the potential to recreate, in the judicial domain, the same effects that individual interests and motivations, governed by the perfect competition paradigm, bring to the market. Moreover, through economic analysis it is possible to rediscover not only the productive function of this legal machinery, but also that partial compensation of victims and large profits for the class counsel, far from being a side-effect, are actually a necessary condition for reallocation of the costs and risks associated with the legal action.
Number of Pages in PDF File: 29 Keywords: class action, collective litigation, mass tort, club, liability JEL Classification: K41, D71, D74, K13, H41 Accepted Paper SeriesDate posted: June 3, 2011 ; Last revised: October 11, 2012Suggested CitationContact Information
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