Public-Good Nature of Environmental Conflicts : Individual and Collective Litigations

Abstract

In environmental conflicts where private citizens sue a

polluter, a private citizens participation in the fight for

environmental damages is characterized by the public good

nature. We examine how the introduction of collective litigation

and asymmetric reimbursement rule affects each citizen's choice

between free-riding and participation in the collective litigation.

Following a Stackelberg model, we assume that citizens move

first and the firm follows, while each citizen has to state his

environmental damages to the court in the process. Important

findings are as follows: First, in the individual litigation, the

hungriest citizen who most highly values environmental damages

is the only one to participate. Second, in the collective litigation,

all citizens participate, provided the total damages of the

citizens' group are sufficiently larger than the damages of the

hungriest citizen. Third, under certain conditions, introduction of

the asymmetric reimbursement rule enhances the possibility that

all citizens participate in the collective litigation.