Class Action Mechanisms in the Comparative Contexts: A Law and Economics Perspective
Class actions are designed to provide claimants a mechanism by which to enforce their rights with objectives including achieving access to justice, being compensated, and deterring misconduct. The significant impact of class disputes on society brings both common law and civil law countries’ attention to the promotion of more efficient enforcement. Through identifying the features of class actions, this study categorizes class action mechanisms into three major types for the purpose of economic analysis: Common Law Type, Civil Law Type A, and Civil Law Type B. A model comprising transaction cost, risk, and incentive, three important factors related to an economic analysis of law, is adopted to evaluate which type of class action is more likely to attain the aforementioned objectives. The results show that Common Law and Civil Law Type B are the two more favorable options with respect to class action designs as Civil Law Type A failed to meet the objectives. However, since class actions reflect some public good nature, a contract failure problem is unavoidable when using private enforcement to pursue public good. While there is no perfect model, non-profit organizations with appropriate governmental intervention are suggested as an option to overcome such restraint.
Recommended Citation: Jing-Huey Shao, Class Action Mechanisms in the Comparative Contexts: A Law and Economics Perspective, 43 Fordham Int'l L.J. 1161 (2020).