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

Abstract

In environmental conflicts where private citizens sue a polluter, a private citizen’s 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.