EVOLVING ENTITLEMENTS - INTERVENING TO PREVENT A COLLECTIVE HARM

When market transactions generate negative externalities, the injured party may initiate court action to prevent harm or to obtain compensat ion. The political response, in some cases, has been to broaden the se t of agents who can intervene through the court, often by admitting en tirely new categories of potential interveners. We employ an experimen tal market setting to investigate the effect of an increase in the num ber of potential interveners (introduced as admitting an additional cl ass of persons having the necessary standing in law). The results sugg est that there will be a substantial increase in the number of actual interventions. The increase means that social resources expended on in terventions will increase and there may be a consequent reduction in t rading activity in the affected markets.