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European Journal of Law and Economics

, Volume 47, Issue 1, pp 1–14 | Cite as

Common law efficiency when joinder and class actions fail as aggregation devices

  • Frank FaganEmail author
  • Urmee Khan
Article
  • 57 Downloads

Abstract

We develop a litigant-based model of rule selection where parties choose to litigate rules that are efficient between two parties, but inefficient as between a potential class or potentially joined litigants and a counter-party. Collective action problems lead to incomplete party formation, which generates continuous litigation of seemingly efficient rules. By accounting for externalities borne by non-parties, we show that rules which are allocatively efficient across both parties and non-parties are evolutionary stable for any given judicial ideology or judicial preference for prestige, thus preserving the explanatory power of the Efficiency of Common Law Hypothesis.

Keywords

Efficient common law hypothesis Joinder Class actions Baconian judges 

JEL classifications

K13 K15 K41 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.EDHEC Business SchoolLilleFrance
  2. 2.University of CaliforniaRiversideUSA

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