Can Markets Stimulate Rights? On the Alienability of Legal Claims

Posted: 5 Jun 2017 Last revised: 20 Apr 2020

See all articles by Daniel L. Chen

Daniel L. Chen

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France

Date Written: June 27, 2015

Abstract

The alienability of legal claims holds the promise of increasing access to justice and fostering development of law. I develop a principal-agent framework where litigation funders provide expertise in reducing uncertainty in agents’ disutility of production. The model leads to the counterintuitive prediction that litigation funders prefer cases with novel issues, and social surplus is positively correlated with legal uncertainty. Consistent with the model, court backlog, court expenditures, and a slowing in average time to completion are associated with third-party funding; cases with third-party funding receive more citations and are reversed less often than comparable cases without such arrangements.

Keywords: Litigation Rights, Legal Services Market

JEL Classification: K10, K40, K41

Suggested Citation

Chen, Daniel L., Can Markets Stimulate Rights? On the Alienability of Legal Claims (June 27, 2015). RAND Journal of Economics, 46(1), 23-65, 2015, Available at SSRN: https://ssrn.com/abstract=2801084

Daniel L. Chen (Contact Author)

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France ( email )

Toulouse School of Economics
1, Esplanade de l'Université
Toulouse, 31080
France

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