Group Litigation, Access to Justice and Deterrence
Bocconi University - Centre for Research on Monetary and Financial Economics; Università degli Studi di Milano-Bicocca
Amsterdam Center for Law & Economics Working Paper No. 2008-04
Policy makers are currently evaluating group litigation as a device to guarantee effective access to justice and to improve deterrence in torts with multiple victims. This paper focuses on how group litigation affects: 1) access to justice, 2) the choice between settlement and litigation, 3) the settlement amount, and finally, 4) deterrence. The main finding is that group litigation does not always improve access to justice and deterrence. On the one hand, group litigation makes it easier for victims to sue, by creating scale economies and improving their confidence in the outcome of a trial. On the other hand, the group is costly for victims to organize and reduces the injurer's liability costs by facilitating settlement and creating scale economies at trial. The combined effect might be a reduction, rather than an increase, in the deterrent effect of tort law.
Number of Pages in PDF File: 35
Keywords: litigation, group litigation, deterrence, access to justice, class action
JEL Classification: K41, K13
Date posted: May 4, 2008