Free riders, holdouts, and public use: a tale of two externalities
AbstractFree riders and holdouts are market failures that potentially impede the completion of otherwise beneficial transactions. The key difference is that the free rider problem is a demand side externality that requires taxation to compel payment for a public good, while the holdout problem is a supply side externality that requires eminent domain to force the sale of land for large scale projects. This paper highlights that distinction between these two problems and uses the resulting insights to clarify the meaning of the public use requirement of the Fifth Amendment takings clause.
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 148 (2011)
Issue (Month): 1 (July)
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Web page: http://www.springerlink.com/link.asp?id=100332
Eminent domain; Free riders; Holdouts; Public use; Takings; H41; K11;
Other versions of this item:
- Thomas J. Miceli, 2009. "Free Riders, Holdouts, and Public Use: A Tale of Two Externalities," Working papers 2009-01, University of Connecticut, Department of Economics.
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
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