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We present, for the first time, a model of recent institutional developments in litigation funding across several European jurisdictions. Recognizing the financing constraints that British cost rules may impose on litigants, these new contractual arrangements combine contingency fees with third party cover for cost in the event of losing the case: we call these "Third Party Contingency" (TPC) contracts. Signing a TPC contract can make filing a suit credible and may increase settlement amounts. This does not, however, increase the likelihood of going to trial, since TPC contracts are only of mutual benefit to the plaintiff and the third party when the case settles out of court. We also find that the mere availability of TPC's may generate the above strategic effect.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jhealeco.2007.01.004 Byline: Paul Fenn (a), Alastair Gray (b), Neil Rickman (c) Keywords: Medical malpractice; Insurance; Litigation Abstract: We test for effects of tort liability on the use of certain diagnostic procedures, where the health care providers' expected cost of litigation is proxied by the risk-sharing arrangements agreed with their insurers. 2SLS and GMM estimators are adopted to test for possible endogeneity of these risk-sharing arrangements. Our findings are consistent with the exercise of liability-induced discretion by hospitals, especially regarding use of costly diagnostic imaging procedures. Hospitals facing higher expected costs per claim as a consequence of higher deductibles used these tests more frequently, after controlling for activity levels and casemix. These results are consistent with hospitals reacting to the incentives provided by a clinical negligence compensation system. Author Affiliation: (a) Nottingham University Business School, Jubilee Campus, Wollaton Rd, Nottingham NG8 IBB, UK (b) Health Economics Research Centre, University of Oxford, UK (c) University of Surrey and CEPR, UK Article History: Received 28 July 2005; Revised 29 September 2006; Accepted 8 January 2007

A model of the contractual relationships between the providers of hospital care in the UK and the country's dominant health care purchasers known as District Health Authorities is developed. The comparative static analysis shows that there are four important determinants in choosing a contract. These are the transaction cost of using non-local hospitals, the anticipated patient demand, the degree of excess capacity in local hospitals and the percentage of that excess capacity predicted to be lost to competitive purchasers.

I. INTRODUCTION The fees charged by lawyers to their clients have long been a source of controversy in many jurisdictions. Plenty of examples can be drawn from England and Wales. [...]

We present evidence on the operation of incentive pay from a field experiment in Pakistan, looking at piece rates and pay based on rank achieved in a tournament. Importantly, some workers are in contracts 'tying' them to the employer for several picking seasons; others are 'untied', in the sense of being employed for only the current season. We find that incentive pay (of either type) improves productivity by 30%, on average, but that there are important differences across the types of workers: in particular, tournament incentives are less effective amongst the tied workers. We suggest that our main results have implications for tournament theory and the design of incentive pay schemes, particularly with regard to the fact that they may discourage some workers and, thus, reduce incentives. [ABSTRACT FROM AUTHOR]

We develop a model to analyse the pattern of R&D network formation when unions have relative preferences over wages and employment. Within a three-firm industry, we show that when the unions place a low weight on wages and technological spillovers are low, a partial R&D network that includes two firms but excludes the third emerges in equilibrium. In contrast, when the unions care a lot about wages, a complete R&D network that includes all firms emerges. For all other intermediate levels of union preferences over wages, there is no strong stable equilibrium network. Empirical implications emerge from these findings, which are also discussed. [ABSTRACT FROM PUBLISHER]