Posted: 11 Aug 1999
This chapter, which will appear in the International Encyclopedia of Law and Economics, surveys the literature on the law and economics of class actions. It provides a basic introduction to the relevant legal terminology, the requirements for class certification and settlement, and the mechanics of operation. It then canvasses the normative arguments that support the availability of the class action, in particular, its distinctive contemporary function of facilitating litigation of claims when individuals possess small stakes in a controversy that, in the aggregate, is large or socially important. The analysis proceeds mainly in Paretian terms. Problems with and objections to class actions are then taken up, including agency failures and settlement sell outs, and parallel class litigation. Fees are discussed in some detail, and the empirical literature is drawn upon at many points. There also is an extensive bibliography.
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