Litigation, Judicial Path-Dependence, and Legal Change

Abstract

In this paper we consider the role that litigation and case selection play in the process of legal change. We examine the effect of judicial path dependence on the consolidation of liability rules and legal remedies, paying special attention to litigation between parties with different stakes. In the presence of asymmetric stakes, judicial path dependence may lead to consolidation or contraction of legal rules. We study the consequence of private litigation decisions on the contraction or consolidation of legal rules under various litigation and judicial environments. We also consider the relevance of the degree of asymmetry in the litigation stakes, the existence and nature of positive litigation costs, and the weight of past precedents on the ongoing process of legal evolution.

JEL Classification: K0, K40, K13, K41