Eminent domain versus government purchase of land given imperfect information about owners’ valuations
Shavell, Steven
Eminent domain versus government purchase of land given imperfect information about owners’ valuations created by Steven Shavell - Journal of Law and Economics Volume 53, number 1 .
Governments employ two basic policies for acquiring land: taking it through the exercise of their power of eminent domain, and purchasing it. The social desirability of these policies is compared in a model in which the government’s information about landowners’ valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land from an owner only if its offer exceeds the owner’s valuation. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government’s acquisition will fail if any of the owners refuses to sell. Hence, eminent domain becomes appealing if the number of landowners is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead is a contiguous parcel that may be located anywhere in a region
00222186
Acquisition costs--Eminent domain--Business orders
Government purchases--Land distribution--Intuition
Land ownership--Social costs--Landowners
HB73 JOU
Eminent domain versus government purchase of land given imperfect information about owners’ valuations created by Steven Shavell - Journal of Law and Economics Volume 53, number 1 .
Governments employ two basic policies for acquiring land: taking it through the exercise of their power of eminent domain, and purchasing it. The social desirability of these policies is compared in a model in which the government’s information about landowners’ valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land from an owner only if its offer exceeds the owner’s valuation. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government’s acquisition will fail if any of the owners refuses to sell. Hence, eminent domain becomes appealing if the number of landowners is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead is a contiguous parcel that may be located anywhere in a region
00222186
Acquisition costs--Eminent domain--Business orders
Government purchases--Land distribution--Intuition
Land ownership--Social costs--Landowners
HB73 JOU