To Regulate, Litigate, or Both

79 Pages Posted: 9 Apr 2009 Last revised: 27 May 2010

Eric Helland

Claremont McKenna College - Robert Day School of Economics and Finance; RAND

Jonathan Klick

University of Pennsylvania Law School; Erasmus School of Law; PERC - Property and Environment Research Center

Multiple version iconThere are 2 versions of this paper

Date Written: March 27, 2009

Abstract

In the United States insurance is regulated both by state insurance commissions and class action litigation. The interaction of these two systems has not been extensively studied. We examine four different facets of the regulation litigation tradeoff. The first is to examine whether a regulator’s interest in a particular cause of action reduces the likelihood that class actions covering this cause of action will be filed in the regulator’s home state. We also examine several measures of regulatory stringency in the state to determine whether there is a substitution effect between regulatory action and litigation. We also examine whether class actions are less frequent when regulators issued an administrative decision on a particular issue previously or if there are no existing state laws on the particular issue. We examine the impact of electing judges on patterns of filing. Lastly, we examine the impact of previous litigation both in the state and the specific line of litigation.

Keywords: administrative law, insurance law, law and economics, products liability, torts, litigation frequency, substitution, regulatory enforcement, original equipment manufacturer parts, regulators, complex litigation

JEL Classification: G22, K13, K23, K41

Suggested Citation

Helland, Eric and Klick, Jonathan, To Regulate, Litigate, or Both (March 27, 2009). U of Penn, Inst for Law & Econ Research Paper No. 09-13; Robert Day School of Economics and Finance Research Paper No. 2009-07. Available at SSRN: https://ssrn.com/abstract=1375522 or http://dx.doi.org/10.2139/ssrn.1375522

Eric A. Helland

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909-607-7275 (Phone)
909-621-8243 (Fax)

RAND ( email )

1776 Main Street
Santa Monica, CA
United States

Jonathan Klick (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
2157463455 (Phone)

Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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