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Review of Law & Economics

Editor-in-Chief: Parisi, Francesco

Ed. by Cooter, Robert D. / Gómez Pomar, Fernando / Kornhauser, Lewis A. / Parchomovsky, Gideon / Engel, Christoph

3 Issues per year


CiteScore 2016: 0.22

SCImago Journal Rank (SJR) 2016: 0.197
Source Normalized Impact per Paper (SNIP) 2016: 0.355

Online
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1555-5879
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Volume 7, Issue 1

Issues

The Multiplier Effect of Public Expenditure on Justice: The Case of Rental Litigation

Bruno Deffains / Ludivine Roussey
Published Online: 2011-08-27 | DOI: https://doi.org/10.2202/1555-5879.1465

When courts are congested, the risk associated with facing a defaulting tenant is high for landlords. They tend to compensate for this risk by increasing rents to include a “risk premium.” This has the effect of making the probability of defaulting increase, as well as further overloading the courts. Using a simple model we show in this paper how a better equilibrium can be reached when the resources of the judiciary are slightly increased. Our explanation is that a rise in public legal resources not only allows courts to produce more decisions (direct effect), but also reduces the number of cases coming in by giving landlords an incentive to charge lower rents (indirect effect). The synergy of the two effects creates a multiplier of public expenditure on justice.

About the article

Published Online: 2011-08-27


Citation Information: Review of Law & Economics, Volume 7, Issue 1, Pages 243–263, ISSN (Online) 1555-5879, DOI: https://doi.org/10.2202/1555-5879.1465.

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©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston. Copyright Clearance Center

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