The article “Regulação ótima e atuação do Judiciário: Uma aplicação de Teoria dos Jogos” (Optimal Regulation and Judiciary Performance – A game theoretic analysis), coauthored with Fernando B. Meneguin, has been published in Economic Analysis of Law Review, 6(1): 91-114, 2015.
The goal of this paper is to analyze the combined effect of the regulation and judicial activism on economic activity and social welfare. A first game includes only the regulation agency and the firms, in which the regulator does not know the cost structure of the firms in a specific market. Then we introduce ex-post judicial activism. There is a probability that a costumer will press charges against a firm in that industry and, in that case, the judicial system will impose a price reduction in that firms’ products. In that case, two different equilibria may arise. If the judicial intervention is moderate, then the two types of intervention complement each other in such a way that the combined effect of ex-ante regulation and ex-post judicial intervention is an increase in expected social welfare. The main contribution of the present research is to bring together the two types of government intervention in the economy, the traditional Executive regulation and the more recent judicial intervention, and better understand the combined effect of these interventions on social welfare.
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