Comparative Collective Redress from a Law and Economics Perspective: Without Risk There Is No Reward!

Abstract

The paper examines the collective enforcement of small-claims from a comparative law and economics perspective. It compares the U.S. class action with European collective redress and demonstrates that the criticism against the U.S. opt-out class action is not valid if the opt-out system is applied in Europe. The paper concludes that the central function of collective redress is to tackle the problem of group organization costs and that the effectiveness of collective law-enforcement and the potential of abuse and adverse effects are inversely proportional to each other.

Keywords: Class action, Collective action, Collective proceedings, Collective redress, Comparative law, EU law, Representative action

JEL Classification: K41