Question

Under what circumstances might it be more effective for people experiencing a negative externality to file...

Under what circumstances might it be more effective for people experiencing a negative externality to file a class-action lawsuit than attempt to resolve the problem through bargaining?

Homework Answers

Answer #1

We know that class action lawsuit means that a group of people who have similar injuries caused by same product. This lawsuit is used for number of people suffered from similar problem. The negative externality we means that a third party party suffered from economic cost. The class action lawsuits can be used for negative externality when many people suffered from the same problem such as, the problem for defective products, hazardous pharmaceutical drugs, medical ethics, etc. In this case people can make class suit as mass tort action.

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