Preliminary injunctions – a law and economic analysis

At Rasmus Bogetoft's seminar he will present his article on The Danish Preliminary Injunction Doctrine and how it can be optimized for the cumulative pay-off for the parties in a lawsuit (i.e. create joint surplus efficiency).

About the article:
Initially, the article uses a market entrance game with two players; the incumbent, a monopolist and the entrant, a newcomer to the market. Awaiting the conclusion of a pending trial regarding the incumbent’s sole right to the market (e.g. due to the possession of a patent), the incumbent can either: do nothing, move for a preliminary injunction or bargain with the entrant in order for her to keep out of the market until the final court ruling. It is shown that when a preliminary injunction is not an option, the parties will still be able to reach an efficient result through bargaining iff
a) there are no costs associated with bargaining and
b) the parties know each other’s’ expected pay-offs.
However, once there exists uncertainty concerning pay-offs, institutional inputs, e.g. a preliminary injunction, may be required. The mere possibility of a preliminary injunction affects the parties' behavior towards efficiency. However, under certain circumstances the actual compulsion of an injunction is required in order to reach efficiency. The application of the Danish Preliminary Injunction Doctrine leads to "almost" joint surplus efficiency. Possible reasons for the "almost" joint surplus efficiency are discussed.

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This seminar is arranged by Law Department.