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A LAW AND ECONOMICS PERSPECTIVE ON INJUNCTIVE RELIEF

A LAW AND ECONOMICS PERSPECTIVE ON INJUNCTIVE RELIEF. Anthony Ogus Louis Visscher. TRADITIONAL LEGAL JUSTIFICATIONS. Inadequacy of damages economic = consumer surplus Public policy economic = externalities. EFFICIENT WRONGDOING. Imperfect legal formulation

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A LAW AND ECONOMICS PERSPECTIVE ON INJUNCTIVE RELIEF

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  1. A LAW AND ECONOMICS PERSPECTIVE ON INJUNCTIVE RELIEF Anthony Ogus Louis Visscher

  2. TRADITIONAL LEGAL JUSTIFICATIONS • Inadequacy of damages • economic = consumer surplus • Public policy • economic = externalities

  3. EFFICIENT WRONGDOING • Imperfect legal formulation • Argument against injunction (though see later)

  4. CALABRESI & MELAMED: PROPERTY RULES & LIABILITY RULES • Role of state in relation to private rights • police power to protect physically (injunction) + power of owner to alienate (Coasian bargaining) = property rule • no such police power thus defendant free to violate on payment of damages = liability rule • Normative approach • economic: minimisation of transaction/administrative costs

  5. TRANSACTION & ADMINISTRATIVE COST CONSIDERATIONS • Case for injunction if continuing tort - enhanced if significant subjective value to right • Case against injunction: high bargaining costs: multi-party – ephemeral relationships – strategic behaviour

  6. EX ANTE CONSIDERATIONS • Incentives to invest in activity: injunctions and damages have different effects on the ex ante incentives from all involved actors to invest in their activity • Incentives to take care ex ante: also here different effects • Compare art. 6:168 Dutch Civil Code

  7. TIMING OF SANCTIONS • Preclusion; Act-based sanctions; Harm-based sanctions • Relevant factors: • Limits to magnitude of sanctions? • Costs of preclusion • Available information • Enforcement Costs • Applied to the choice between damages and injunction

  8. CONCLUSIONS Relevant issues: • Subjective dimension; • Social value of the activity; • Ex ante investment and care; • Factors determining optimal timing.

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