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The Case for Restricting Access to CourtsMichael C. JensenHarvard Business School; Social Science Electronic Publishing (SSEP), Inc.; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI) William H. MecklingSimon School, University of Rochester (Deceased) Clifford G. HoldernessBoston College - Department of Finance May 1, 1981 MERC Working Paper No. 81-06 Harvard Business School NOM Unit Working Paper No. 1981 Abstract: This article examines unrecognized implications of various doctrines governing access to court. The analysis indicates that doctrines such as standing, res judicata and collateral estoppel have far reaching implications for the nature of adjudication and the basic structure of rights in society. A liberal standing doctrine causes Peremptory Adjudication, creates inalienable rights and erodes the common law doctrine against suing competitors. Inalienability of rights causes the Coase Theorem to fail and creates externalities. Furthermore, allowing suit over non-contractual pure value effects creates closed market monopolies. All these factors reduce efficiency and thereby reduce human welfare. In this sense the analysis (1) indicates the widespread enthusiasm for democratization of the courts is mistaken, and (2) provides the case for restricting access to the courts.
Number of Pages in PDF File: 40 Keywords: standing, stare decisis, res judicata, collateral estoppel, Coase Theorem, courts, legal system, efficiency, adjudication, rights, externalities JEL Classification: K1, K2, K3, K4 working papers seriesDate posted: December 28, 2004 ; Last revised: January 17, 2011Suggested CitationContact Information
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