Incentive Effects of Class Actions and Punitive Damages Under Alternative Procedural Regimes

15 Pages Posted: 14 Sep 2010  

Marta Cenini

University of Milan - Faculty of Law

Barbara Luppi

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics; University of St. Thomas School of Law

Francesco Parisi

University of Minnesota - Law School; University of Bologna

Date Written: September 11, 2010

Abstract

In an economic perspective, punitive damages and class actions can be viewed as sharing a common economic function – creating optimal deterrence. Building on Parisi and Cenini (2010), we study the effect of alternative procedural regimes on the effectiveness of punitive damages and class actions. Specifically, we compare the workings of punitive damages and class actions in the American and English (“loser-pays”) regimes. Our findings help explain the limited use and late adoption of class actions and punitive damages in Europe.

Keywords: Punitive Damages, Class Actions, Loser-Pays Rule, Incentives

JEL Classification: K13, K4

Suggested Citation

Cenini, Marta and Luppi, Barbara and Parisi, Francesco, Incentive Effects of Class Actions and Punitive Damages Under Alternative Procedural Regimes (September 11, 2010). Minnesota Legal Studies Research Paper No. 10-50. Available at SSRN: https://ssrn.com/abstract=1675625 or http://dx.doi.org/10.2139/ssrn.1675625

Marta Cenini

University of Milan - Faculty of Law ( email )

Via Festa del Perdono, 7
20122 Milano
Italy

Barbara Luppi

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics ( email )

Viale Berengario 51
41100 Modena, Modena 41100
Italy

University of St. Thomas School of Law

2115 Summit Avenue
Saint Paul, MN 55105
United States

Francesco Parisi (Contact Author)

University of Minnesota - Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

University of Bologna ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

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