Costly Litigation and Optimal Damages

A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the influence of litigation costs on the optimal level of damages, assuming that litigation costs rise with the level of damages.

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Year of publication:	2012-12
Authors:	Polinsky, A. Mitchell ; Shavell, Steven
Institutions:	Stanford Institute for Economic Policy Research (SIEPR), Stanford University

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Extent:	application/pdf
Series:	Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 12-005
Classification:	K13 - Tort Law and Product Liability ; K41 - Litigation Process
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010595389