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Contract GovernanceDimensions in Law and Interdisciplinary Research$
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Stefan Grundmann, Florian Möslein, and Karl Riesenhuber

Print publication date: 2015

Print ISBN-13: 9780198723202

Published to Oxford Scholarship Online: September 2015

DOI: 10.1093/acprof:oso/9780198723202.001.0001

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Class Actions, Compliance, and Moral Cost

Class Actions, Compliance, and Moral Cost

(p.276) 9 Class Actions, Compliance, and Moral Cost
Contract Governance

Bruno Deffains

Dominique Demougin

Oxford University Press

This chapter studies the effects of introducing class actions in a competitive environment where some firms have intrinsic motivation to implement the efficient care level. The standard aggregation argument in favour of class action holds that we will see increasing efficiency due to lower litigation costs. In the short run, intrinsically motivated firms benefit from the introduction of a class action procedure. In the long run, new entrants are attracted in the market thereby increasing consumer surplus. These entrants are all intrinsically motivated, and overall average care increases.

Keywords:   class actions, liability, intrinsic motivation, care, efficiency

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