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Advocatus, et non latro? Testing the supplier-induced demand hypothesis for Italian courts of justice
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Advocatus, et non latro? Testing the supplier-induced demand hypothesis for Italian courts of justice

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  • Paolo Buonanno
  • Matteo M. Galizzi

Abstract

We explore the relationship between litigation rates and the number of lawyers, in a typical supplier-induced demand (SID) frame. Drawing on an original panel dataset for the 169 Italian courts of justice between 2000 and 2007, we first document that the number of lawyers is positively correlated with different measures of litigation rate. Then, using an instrumental variables strategy we find that a 10 percent increase of lawyers over population is associated with an increase between 1.6 to 6 percent in civil litigation rates. Thus our empirical analysis supports the SID hypothesis for the Italian lawyers: following an increase in their relative number, lawyers may exploit their informational advantage to induce clients to access to courts even when litigation is unnecessary or ineffective.

Suggested Citation

  • Paolo Buonanno & Matteo M. Galizzi, 2009. "Advocatus, et non latro? Testing the supplier-induced demand hypothesis for Italian courts of justice," Working Papers 0914, University of Brescia, Department of Economics.
    • Handle: RePEc:ubs:wpaper:0914
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    3. Doménech-Pascual, Gabriel & Martínez-Matute, Marta & Mora-Sanguinetti, Juan S., 2021. "Do fee-shifting rules affect plaintiffs’ win rates? A theoretical and empirical analysis," International Review of Law and Economics, Elsevier, vol. 65(C).
    4. Monica Billio & Roberto Casarin, 2010. "Bayesian Estimation of Stochastic-Transition Markov-Switching Models for Business Cycle Analysis," Working Papers 1002, University of Brescia, Department of Economics.
    5. Juan S. Mora-Sanguinetti & Marta Martínez-Matute, 2019. "An economic analysis of court fees: evidence from the Spanish civil jurisdiction," European Journal of Law and Economics, Springer, vol. 47(3), pages 321-359, June.
    6. Bisin, A. & Geanakoplos, J.D. & Gottardi, P. & Minelli, E. & Polemarchakis, H., 2011. "Markets and contracts," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 279-288.
    7. Massenot Baptiste, 2010. "Contract Enforcement, Litigation, and Economic Development," Cahiers de Recherches Economiques du Département d'économie 10.14, Université de Lausanne, Faculté des HEC, Département d’économie.
    8. Massimo Finocchiaro Castro & Calogero Guccio, 2014. "Searching for the source of technical inefficiency in Italian judicial districts: an empirical investigation," European Journal of Law and Economics, Springer, vol. 38(3), pages 369-391, December.
    9. Buonanno Paolo & Galizzi Matteo M., 2014. "Advocatus, et non Latro? Testing the Excess of Litigation in the Italian Courts of Justice," Review of Law & Economics, De Gruyter, vol. 10(3), pages 285-322, November.
    10. Rizos, Anastasios & Kapopoulos, Panayotis, 2021. "Judicial Efficiency and Economic Growth: Evidence based on EU data," MPRA Paper 107861, University Library of Munich, Germany.
    11. Juan S. Mora-Sanguinetti & Nuno Garoupa, 2015. "Litigation in Spain 2001-2010: Exploring the market for legar services," Working Papers 1505, Banco de España.
    12. Lara Wemans & Manuel Coutinho Pereira, 2015. "Determinants of civil litigation in Portugal," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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