Things Fall Apart: Regulating The Credit Default Swaps Commons

92 Pages Posted: 24 Mar 2010 Last revised: 20 Nov 2010

Kristin N. Johnson

Seton Hall University School of Law

Date Written: March 16, 2010


Financial markets are an important national and international infrastructure resource that reflect attributes similar to the those that characterize commons, as described in property law literature. Through a case study examining the credit default swap market, this Article illustrates the analogy between financial markets and a traditional commons. After exploring the attributes of a commons, this Article examines the costs and benefits of the credit default swap market. Similar to a traditional commons, tragedy in financial markets occurs when market participants capture benefits while imposing the costs or negative externalities from their activities on other members of society. Commons scholars’ empirical research suggests three traditional approaches to tragedy in a commons - deregulation, privatization, and regulation by a central, external authority.

Keywords: financial markets, regulation, derivatives, Dodd-Frank, SRO, stock exchanges, clearing houses, commons

Suggested Citation

Johnson, Kristin N., Things Fall Apart: Regulating The Credit Default Swaps Commons (March 16, 2010). University of Colorado Law Review, Vol. 82, p. 101, 2011; Seton Hall Public Law Research Paper No. 2010-23 . Available at SSRN:

Kristin N. Johnson (Contact Author)

Seton Hall University School of Law ( email )

One Newark Center
Newark, NJ 07102-5210
United States
973-642-8198 (Phone)
973-642-8546 (Fax)


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