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Legal Expenses Insurance as a Public Good

(2010) p.1-18
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Abstract
Previous research shows that in order for LEI to develop, government and/or employers and trade unions must promote LEI to groups. Stand-alone policies are unlikely to be successful, but group or add-on policies are more likely to be thriving. While some reasons have been offered in the literature for the difficulty of the LEI market to develop, we focus on a hitherto unexplored explanation: the free rider problem that is associated with the provision of a public good. When potential injurers cannot distinguish between potential victims with and without LEI, taking LEI creates positive externalities. The potential victim taking LEI bears the full cost of the policy, but all potential victims enjoy the benefit of the increase in care adopted by the potential injurer. We further examine the consequences for the private versus the social incentive to take LEI.
Keywords
LEI, Legal expenses insurance, public good, ex ante observable precautions, ex post observable precautions., social welfare

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Citation

Please use this url to cite or link to this publication:

Chicago
De Mot, Jef, and Michael Faure. 2010. “Legal Expenses Insurance as a Public Good.” In , 1–18.
APA
De Mot, Jef, & Faure, M. (2010). Legal Expenses Insurance as a Public Good (pp. 1–18). Presented at the European Association Law and Economics 2010.
Vancouver
1.
De Mot J, Faure M. Legal Expenses Insurance as a Public Good. 2010. p. 1–18.
MLA
De Mot, Jef, and Michael Faure. “Legal Expenses Insurance as a Public Good.” 2010. 1–18. Print.
@inproceedings{1070897,
  abstract     = {Previous research shows that in order for LEI to develop, government and/or employers and trade unions must promote LEI to groups. Stand-alone policies are unlikely to be successful, but group or add-on policies are more likely to be thriving. While some reasons have been offered in the literature for the difficulty of the LEI market to develop, we focus on a hitherto unexplored explanation: the free rider problem that is associated with the provision of a public good. When potential injurers cannot distinguish between potential victims with and without LEI, taking LEI creates positive externalities. The potential victim taking LEI bears the full cost of the policy, but all potential victims enjoy the benefit of the increase in care adopted by the potential injurer. We further examine the consequences for the private versus the social incentive to take LEI.},
  author       = {De Mot, Jef and Faure, Michael},
  keyword      = {LEI,Legal expenses insurance,public good,ex ante observable precautions,ex post observable precautions.,social welfare},
  language     = {eng},
  location     = {Paris II, Panth{\'e}on-Assas},
  pages        = {1--18},
  title        = {Legal Expenses Insurance as a Public Good},
  url          = {http://www.eale2010.eu/ocs/index.php/EALE/2010/paper/view/71},
  year         = {2010},
}