Politics, Markets, and Dispute Resolution
14 Pages Posted: 12 Mar 2014
Date Written: March 10, 2014
In bringing economic analysis to bear on whether a dispute is settled without trial, the presumed institutional setting is typically one of private property where the parties are residual claimants to their legal expenses. Many disputes, however, are between private and public parties. In these disputes there is a conflict between substantive rationalities because public parties are not residual claimants. Just as the substantive content of action can vary depending on whether the actor operates within a context of private or common property, so can the substance of dispute settlement vary. While a public actor cannot pocket legal expenses that are saved through settlement, the expenses of trial can serve as an investment in pursuing future political ambitions.
Keywords: dispute resolution; substantive rationality; private vs. public ordering; market conformability
JEL Classification: D23, D74, K40
Suggested Citation: Suggested Citation