A Model of the Endogenous Development of Judicial Institutions

Abstract

Why do sovereign governments create judicial institutions and grant these institutions the power to rule their actions invalid? Once such a court is created, under what conditions is that court able to rule against these governments and get compliance with their rulings? Finally, how might the influence of the court change over time? This study presents a general theory of judicial institutions that provides a unified answer to these three questions. I argue that governments create judicial institutions to help solve collective action problems endemic to operating under a common regulatory regime. Once established, a court in its institutional "infancy" is capable of facilitating compliance with that regulatory regime's rules but only consistent with the purpose for which the governments created the court. And finally, once the court has earned the trust of a government's public, its ability to enforce the regulatory regime's rules qualitatively expands. In demonstrating this last point, I derive how and why publics can rationally come to believe that supporting a court, if there was a conflict between its government and the court, would be in that public's interest.

Keywords: Courts, Institutions, Endogenous Change

JEL Classification: C72