Seth Oranburg (University of New Hampshire Franklin Pierce School of Law) has posted “Private” Governance Is Actually a Club Good on SSRN. Here is the abstract:
Network governance is a club good. Courts that displace a network’s authority to ostracize rule-breakers weaken the excludability that makes governance valuable to members and non-members alike. When the ostracism mechanism loses credibility, members defect from governance obligations, governance quality declines, and the positive externalities governance creates for non-members disappear. Courts should therefore recognize doctrines that defer to network decisions as implicit Pigouvian subsidies that reduce governance costs and help prevent the undersupply of socially valuable governance.
Highly recommended! Very interesting. For an introduction to the idea of a “club good” and its relationship to public and private goods, see Legal Theory Lexicon 029: Public and Private Goods.
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