Does Increased Litigation Increase Justice in a Second-Best World?


Taking as given the claims of tort reform proponents, that increased tort liability in the past few decades has had deleterious effects on American productivity, consumer safety, etc., we consider whether proposed measures to increase access to the courts are likely to be beneficial, with a specific focus on third-party financing and lawyer advertising.  We conclude that our current system is a second-best system and, applying the theory of the second-best, we conclude that increasing access would magnify the negative effects of increased tort liability and legal complexity.