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Gordon Tullock and the Virginia School of Law and Economics

Abstract

In 1999 Gordon Tullock became Professor at the George Mason University Law School. Tullock’s arrival at George Mason brought the economics department and the law school close together. The work that resulted during those years consolidated the methodological foundations for a different way of thinking about the economic analysis of law—the “functional” approach to law and economics. The functional law and economics approach espoused by the Virginia School was not attacking any of the results of the Chicago School or the Yale School, but rather proposing a methodological shift. This paper presents some of the results developed by this school and illustrates Tullock’s controversial positions on trials and on the common law system, through anecdotes, Tullock’s own work and related scholarly contributions.

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Fig. 1

Notes

  1. The anecdotes and personal memories here are courtesy of Prof. Parisi, who was a colleague of Prof. Tullock's when he joined the Law Faculty at George Mason University.

  2. Following Parisi (2002), a change in the mix of adversarial and inquisitorial components should have no effect on the total return, but may change the plaintiff and defendant’s returns from litigation.

  3. Total dissipation increases monotonically in the number of participants \(N\) in litigation, ranging from one half up to the full value of the case. See Dari-Mattiacci and Parisi (2005) on the mixed-strategy solution to Tullock’s paradox. See also Higgins et al. (1985) for rent-seeking contests with endogenously determined numbers of litigants.

  4. Not surprisingly, total discovery and litigation costs increase with the value of the case, \(m_{\text{A}}\), assessed on the basis of adversarially-produced evidence.

  5. This explicit formulation is motivated, because in jurisdictions adopting the English rule, courts liquidate litigation costs on the basis of the fees established by the professional bar associations, computed according to the value of the case and the actual litigation costs (reflected by the number of hearings and motions filed, etc.).

  6. For clarity, the dependence of the probability function p on \(E_{P}\) and \(E_{D}\) is omitted throughout the text.

  7. See also Priest (1977), Priest and Klein (1984), Fon and Parisi (2003), and Fon et al. (2005) for early work on case selection in common law.

  8. See Tullock (1996, 2004, 2005, p. 441), for the plaintiff’s externality under the American rule. According to Fon and Parisi (2009) and Luppi and Parisi (2012, 2015), the selection of different cases under different fee-shifting rules leads to different paths of evolution of judge-made law. Once adjudicated, these cases will generate a negative flow of precedents, leading to a reduced likelihood of success of similar cases in the future. Region B may lead to bubbles of litigation, generating contractionary trends under the American rule, not otherwise observed under the English rule. On the contrary, cases in region C will more likely generate a flow of positive precedents and adjudication of these cases will lead to the consolidation of judge-made rules. Region C will more likely foster consolidation of remedies and a greater stability of legal protection under the English rule.

  9. Any legal system using the English rule sets limitations on the amount of recoverable legal fees on the basis of the reasonableness and proportionality of the expenditures for the assertion and defense of the legal rights in question. See also Bungard (2006).

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Correspondence to Francesco Parisi.

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Parisi, F., Luppi, B. & Guerra, A. Gordon Tullock and the Virginia School of Law and Economics. Const Polit Econ 28, 48–61 (2017). https://doi.org/10.1007/s10602-016-9216-8

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Keywords

  • Rent-seeking
  • Litigation
  • Fee-shifting rule
  • Virginia School of Law and Economics

JEL Classification

  • C72
  • D72
  • K10
  • K41