The Law and Economics of Class Actions in Europe
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The Law and Economics of Class Actions in Europe

Lessons from America

  • New Horizons in Law and Economics series

Edited by Jürgen G. Backhaus, Alberto Cassone and Giovanni B. Ramello

This well-documented book discusses the power and limitations of class actions with insights and analysis from a panel of distinguished scholars. It pays special attention to the introduction and the applicability of such a legal device in European civil law countries. The book offers a broad legal and economic investigation, drawing insights from US judicial experience and giving a rigorous discussion of both the philosophical and constitutional aspects and the economic mechanisms and incentives set up by class actions.
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Chapter 1: The Law and Economics of Class Action Litigation: Setting the Research Agenda

Jürgen G. Backhaus, Alberto Cassone and Giovanni B. Ramello

Extract

JOBNAME: Ramello PAGE: 3 SESS: 2 OUTPUT: Tue Feb 28 11:47:52 2012 1. The law and economics of class action litigation: setting the research agenda Jürgen G. Backhaus, Alberto Cassone and Giovanni B. Ramello1 1. MAKING SENSE OF AGGREGATE LITIGATION In 1961 an influential contribution by Guido Calabresi, ‘Some Thoughts on Risk Distribution and the Law of Tort’, challenged the then-prevailing assumption that spreading losses was more efficient than concentrating them just because ‘the real burden of a loss is smaller the more people share it’ (p. 517). Just a few years later another seminal work, The Logic of Collective Action by Mancur Olson (1965), provided evidence that the uncoordinated action of individuals can sometime be less efficient than coordinated action. Olson’s contribution then became a prominent explanation of the formation of groups and, as a by-product, of the emergence of specific institutions whose purpose it is to make that coordination possible. The two researches were not related; yet, it is here argued, they provided two pillars for explaining the emergence of aggregate litigation and class 1 The research contained in this volume has been favoured by the brainstorming occurred at the conference ‘Introducing Class Action in Europe: A Comparative Law and Economics’ held in Alessandria in January 2007, organized by two of us with the help of two other colleagues. The insights provided by this venue has proven to be crucial for gathering the list of book contributors and identifying the topics...

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