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Holdout and Eminent Domain in Land Acquisition

Author

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  • CHOWDHURY, INDRĀNI ROY
  • CHOWDHURY, PRABAL ROY

Abstract

This paper examines the welfare implications of imposing eminent domain laws in a multilateral dynamic bargaining framework with one buyer, and multiple land sellers. We establish that if the minimal level of compensation is set at the 'right' level then eminent domain laws can be helpful. To be precise if the buyer is a 'small' one, then eminent domain laws are not just efficiency improving, but also lead to a Pareto improvement.The issue is a nuanced one however. For one, if the buyer is 'large' one, then eminent domain would improve seller payoff, but will have no efficiency implications. For another, in case the bargaining process is transparent, such laws may affect the sellers differentially; while some may gain, others may be adversely affected.

Suggested Citation

  • Chowdhury, Indrāni Roy & Chowdhury, Prabal Roy, 2016. "Holdout and Eminent Domain in Land Acquisition," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 51(1), pages 1-19.
    • Handle: RePEc:dse:indecr:0108
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    More about this item

    Keywords

    Eminent Domain; Holdout; Compensation; Multi-person Bargaining; Efficiency; Secret Offers; Public Offers.;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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