Boston University School of Law

The Economics of Injunctive and Reverse Settlements


Keith N. Hylton

Sungjoon Cho


Boston University School of Law Working Paper 09-10

Abstract

This paper extends the economic literature on settlement, and draws some practical insights on reverse settlements.  The key contributions to the economic literature on settlements follow from the distinction drawn between standard settlements, in which the status quo is preserved, and injunctive settlements, which prohibit the defendant’s activity.  The analysis identifies the conditions under which injunctive settlements (rather than standard settlements) are likely to be observed and the conditions under which reverse settlements will be observed among the injunctive settlements.  Specifically, reverse settlements are likely when the stakes associated with the injunction are large relative to damages and litigation costs. The analysis of settlement here has broader implications for efficient remedies and legal rules.

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Suggested Citation:

Keith N. Hylton and Sungjoon Cho, "The Economics of Injunctive and Reverse Settlements"

Contact Information

Keith N. Hylton

Boston University School of Law
765 Commonwealth Avenue
Boston, MA 02215
knhylton@bu.edu

Sungjoon Cho
Chicago-Kent College of Law
565 West Adams Street
Chicago, IL 60661-3691
Phone: (312) 906-5169
Fax: (312) 906-5280
scho1@kentlaw.edu

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