Property Rights and Infrastructure Developments: Theory and Experience

In literature, it is accepted as fact that compulsory purchase and compensation problems are associated with the level of infrastructure development; this paper will try to link these compensation problems and the level of infrastructure development. For this purpose, firstly, it will formulate the benefits accrued to society as a result of various developments; it will use the model to theoretically investigate the condition under which those benefits will be maximized. Secondly, it will employ a data set from Japan as one of the examples of developed markets to reveal the empirical facts and problems on infrastructure developments in countries with quite high levels of inventories of roads, railways or means of transportation. Theoretical findings will be consistent with price premiums in cases of compulsory purchase, where loss of ownership, livelihood, or violation of right of land owners become issues; they also will reveal an issue concerning the optimal level of inventories for infrastructure, which this paper will also examine in the second part.