Harnay, Sophie; Marciano, Alain --- "Collective Litigation versus Legislation: A Rent-Seeking Approach to Class Actions" [2012] ELECD 311; in Backhaus, G. Jürgen; Cassone, Alberto; Ramello, B. Giovanni (eds), "The Law and Economics of Class Actions in Europe" (Edward Elgar Publishing, 2012)

Book Title: The Law and Economics of Class Actions in Europe

Editor(s): Backhaus, G. Jürgen; Cassone, Alberto; Ramello, B. Giovanni

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847208033

Section: Chapter 12

Section Title: Collective Litigation versus Legislation: A Rent-Seeking Approach to Class Actions

Author(s): Harnay, Sophie; Marciano, Alain

Number of pages: 18

Extract:

12. Collective litigation versus
legislation: a rent-seeking approach
to class actions
Sophie Harnay and Alain Marciano

A traditional conception of courts considers them as meeting the indi-
vidual demands of litigants to fill the gaps in legislation. The argument can
easily be extended to collective litigation in which a collective demand to
courts can be interpreted as the consequence of inadequate public regula-
tion. However, although class actions were at first adorned with any virtue,
the abuses and excesses observed since the 1990s in the USA and the
emphasis put on the costs that they may bring on firms and collectivity have
modified this overall positive perception. This chapter argues that despite
their well-known drawbacks, class actions nevertheless entail some advan-
tages that should not be underestimated. More precisely, we argue that class
actions and political lobbying in the political market may provide groups
with two alternative rent-seeking technologies, allowing groups to obtain
their desired legal outcome that may therefore take the form either of a
favourable legislation or a favourable judicial ruling. However, although
much of the economic literature has been devoted to studying the choice
between litigation and settlement, the choice between litigation and legisla-
tion has been quite overlooked. Furthermore, the rare papers that consider
the choice between litigation and legislation do not consider the collective
dimension of litigation through class action but only individual suits. This
chapter is an attempt to suggest some elements to fill this gap. More
precisely, among other determinants, ...