Redistribution Mechanisms

26 Pages Posted: 7 Jul 2005

See all articles by Jacob Nussim

Jacob Nussim

Bar-Ilan University - Faculty of Law

Date Written: June 2005

Abstract

Many legal scholars believe that equity concerns should be taken into consideration in designing legal rules. Kaplow and Shavell (1994) seriously challenged this approach. This paper revisits their "double distortion" claim, presenting two main arguments. The first questions the ex-ante framework for evaluating redistribution, which implies that society pays attention to the ex-post (actual) rather than the expected redistribution only, in which case, Kaplow and Shavell's ex-ante framework would be inappropriate. Secondly, it is shown that in principle tort rules can easily be designed to circumvent "double distortion" effects. Thus, the tort system is not inherently less efficient than the tax-transfer system for accomplishing redistribution. The paper generally concludes that although there are often no good reasons for redistribution within the legal system, theoretically it is not an inferior distribution mechanism.

Keywords: Equity, Legal Design

JEL Classification: D01, D32, D63, H3, K13, K34

Suggested Citation

Nussim, Jacob, Redistribution Mechanisms (June 2005). Bar Ilan Univ. Pub Law Working Paper No. 9-05. Available at SSRN: https://ssrn.com/abstract=753284 or http://dx.doi.org/10.2139/ssrn.753284

Jacob Nussim (Contact Author)

Bar-Ilan University - Faculty of Law ( email )

Faculty of Law
Ramat Gan, 52900
Israel
972-3-531-7088 (Phone)
972-3-535-1856 (Fax)

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