Public Enforcement of Private Rights: An Economic Approach.Working paper (2016)
Governmental entities enforce private rights in order to overcome transaction costs – specifically to overcome coordination costs and budget constraints. These enforcements take two forms.
First, governmental entities aggregate small identical claims into mass-actions in order to enforce privately-inefficient-but-socially-efficient claims by taking advantage of economies of scale. Using a state and a federal example, this paper argues that this overlapping enforcement has created inefficiencies: race to court because of rent seeking; inconsistent enforcement because of diverging remedies; etc. As a social planner, the government should focus on private rights that cannot be efficiently and privately enforced instead of large ticket items.
Second, governmental entities finance claims that privately impossible to enforce because of budget constraints. Those unenforced and socially-efficient claims are under-litigated; as a result, lawbreakers remain under-deterred. Using a state and a federal example, this paper argues that selecting the correct claims remains difficult and the selection process is often opaque and without remedy for right-holders. As a social planner, the government needs to strike a balance between inducing right-holders to cooperate without incentivizing false claims.
While these two types of intervention seem to differ, both exhibit one common feature: public and private enforcers struggle over control of the suits. Using best practices from different areas, this paper offers some suggestions on how to reach higher efficiency levels.
- private right,
- public suits,
- law and economics,
- virginia payment of wage act,
- housing and urban development,
Citation InformationGarry A. Gabison. "Public Enforcement of Private Rights: An Economic Approach." Working paper (2016)
Available at: http://works.bepress.com/garry_gabison/17/