Privatizing the Adjudication of Disputes

Theoretical Inquiries in Law, Vol. 9, No. 2, pp. 503-528, 2008

23 Pages Posted: 10 Sep 2010

See all articles by Bryan Caplan

Bryan Caplan

George Mason University - Center for Study of Public Choice

Edward Peter Stringham

Trinity College; American Institute for Economic Research

Date Written: 2008

Abstract

Must the state handle the adjudication of disputes? Researchers of different perspectives, from heterodox scholars of law who advocate legal pluralism to libertarian economists who advocate privatizing law, have increasingly questioned the idea that the state is, or should be, the only source of law. Both groups point out that government law has problems and that non-state alternatives exist. This article discusses some problems with the public judicial system and several for-profit alternatives. Public courts lack both incentives to be customer oriented and pricing mechanisms, plus they face problems associated with the bureaucratic provision of services.

When parties can choose their tribunals, in contrast, those tribunals must serve customers and be mindful about conserving resources. Competition between arbitrators also can allow for experimentation and the provision of customized services rather than a centrally planned, one size fits all system. Contracts with an arbitration clause can easily stipulate the choice of tribunal, and we argue that if government courts simply refused to overrule binding arbitration agreements, de facto privatization could easily take place. This article discusses how private adjudication of disputes could enable the market to internalize externalities and provide services that customers desire.

Suggested Citation

Caplan, Bryan and Stringham, Edward Peter, Privatizing the Adjudication of Disputes (2008). Theoretical Inquiries in Law, Vol. 9, No. 2, pp. 503-528, 2008. Available at SSRN: https://ssrn.com/abstract=1674441

Bryan Caplan

George Mason University - Center for Study of Public Choice ( email )

Fairfax, VA 22030
United States
703-993-2324 (Phone)
703-993-2323 (Fax)

Edward Peter Stringham (Contact Author)

Trinity College ( email )

Hartford, CT 06106
United States

American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States

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