Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach

19 Pages Posted: 22 Jul 2005

See all articles by Michael R. Baye

Michael R. Baye

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Dan Kovenock

Chapman University - Economic Science Institute; CESifo (Center for Economic Studies and Ifo Institute)

Casper G. de Vries

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Tinbergen Institute; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

A simple auction-theoretic framework is used to examine symmetric litigation environments where the legal ownership of a disputed asset is unknown to the court. The court observes only the quality of the case presented by each party, and awards the asset to the party presenting the best case. Rational litigants influence the quality of their cases by hiring skillful attorneys. This framework permits us to compare the equilibrium legal expenditures that arise under a continuum of legal systems. The British rule, Continental rule, American rule, and some recently proposed legal reforms are special cases of our model.

Suggested Citation

Baye, Michael Roy and Kovenock, Daniel and De Vries, Casper, Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach. Economic Journal, Vol. 115, No. 505, pp. 583-601, July 2005, Available at SSRN: https://ssrn.com/abstract=760510

Michael Roy Baye (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
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Daniel Kovenock

Chapman University - Economic Science Institute ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Casper De Vries

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

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Tinbergen Institute

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Rotterdam, 3062 PA
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+31 10 408 9147 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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