Dispute Resolution When Rationalities Conflict: Cost and Choice in a Mixed Economy

38 Pages Posted: 4 Sep 2011

See all articles by Richard E. Wagner

Richard E. Wagner

George Mason University - Department of Economics; George Mason University - Mercatus Center

Date Written: September 3, 2011

Abstract

In bringing economic analysis to bear on the settlement of legal disputes, it is commonly presumed that the parties to the dispute are governed by the principles of private property and so are residual claimants to their legal expenses. This institutional framework promotes a substantive rationality that is often conducive to the settlement of disputes without trial. In contemporary mixed economies, however, a political agency is often party to a dispute. These agencies operate under a different substantive rationality because the framework of collective property under which they operate means they do not have residual claims on their legal expenses. They can, however, convert those expenses into investments in politically preferred activity. What results is a conflict between rationalities that generates societal tectonics that often are misidentified as market failures when they are really systemic properties of the conflicting rationalities.

Keywords: dispute resolution, substantive rationality, private vs. public ordering, market conformability, dyadic vs. triadic market architecture

JEL Classification: D23, D74, K40

Suggested Citation

Wagner, Richard E., Dispute Resolution When Rationalities Conflict: Cost and Choice in a Mixed Economy (September 3, 2011). GMU Working Paper in Economics No. 11-34, Available at SSRN: https://ssrn.com/abstract=1921929 or http://dx.doi.org/10.2139/ssrn.1921929

Richard E. Wagner (Contact Author)

George Mason University - Department of Economics ( email )

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HOME PAGE: http://mason.gmu.edu/~rwagner/

George Mason University - Mercatus Center ( email )

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HOME PAGE: http://ppe.mercatus.org/scholars/richard-wagner

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