Analysis of Alternative Standing Doctrines

International Review of Law and Economics, Vol. 6, 1986

Harvard Business School NOM Unit Working Paper No. 1986

22 Pages Posted: 17 Aug 2000 Last revised: 17 Jan 2011

See all articles by Michael C. Jensen

Michael C. Jensen

Harvard Business School; SSRN; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit

William H. Meckling

Simon School, University of Rochester (Deceased)

Clifford G. Holderness

Boston College - Department of Finance

Date Written: June 30, 1986

Abstract

The right to bring an action in court is an important right which many argue should be granted liberally. The United States Supreme Court, for example, has held that under certain situations access to court is a citizen's fundamental right. This paper discusses one facet of access to the courts, namely, standing to sue: the legal doctrine shaped by both courts and legislatures which determines who can bring a particular lawsuit.

Discussions of standing have tended to focus on normative arguments about what standing should be while often neglecting positive implications of alternative standing doctrines. Standing doctrines that either increase or decrease access to court have predictable consequences relevant to the Supreme Court's admonition that standing decisions should be predicated not only upon constitutional considerations but also on practicalities and prudential consequences. Our analysis shows that many liberalizations of standing block the transfer of resources from less valuable to more valuable uses. In that regard they are, to use the Supreme Court's language, impractical and imprudent. In economic terms, standing that is too liberal generates inefficiencies.

Section I explores the different consequences of polar standing rules: A rule that allows only one person standing in a particular suit is contrasted with a rule that allows everyone standing. Here, as in most of the paper, the analysis focuses on private lawsuits and ignores lawsuits brought against public officials. Section II summarizes the relevant literature and reviews the liberalizations of standing over the past twenty years. Section III discusses the largely unrecognized relationship between restrictive standing, alienable rights, and efficiency; also reviewed here are class action lawsuits and standing to sue public officials. Section IV contains the conclusions.

Keywords: standing, legal doctrine, U.S. Supreme Court, rights, efficiency, transaction costs, alienability

Suggested Citation

Jensen, Michael C. and Meckling, William H. and Holderness, Clifford G., Analysis of Alternative Standing Doctrines (June 30, 1986). International Review of Law and Economics, Vol. 6, 1986; Harvard Business School NOM Unit Working Paper No. 1986. Available at SSRN: https://ssrn.com/abstract=173453 or http://dx.doi.org/10.2139/ssrn.173453

Michael C. Jensen (Contact Author)

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William H. Meckling

Simon School, University of Rochester (Deceased)

Clifford G. Holderness

Boston College - Department of Finance ( email )

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