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A Bargaining Model of Holdouts and Takings

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Author Info
Thomas Miceli (University of Connecticut)
Kathleen Segerson (University of Connecticut)

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Abstract

The holdout problem is commonly cited as the justification for eminent domain, but the nature of the problem is not well understood. This paper models the holdout problem in a bargaining framework, where a developer seeks to acquire several parcels of land for a large-scale development. We show that in the absence of eminent domain, holdouts are inevitable, threatening costly delay. However, if the developer has the power to use eminent domain to acquire the land from holdouts, all sellers will bargain, thus avoiding delay. An offsetting cost is that owners may negotiate prices below their true value, possibly resulting in excessive transfer of land to the developer.

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File URL: http://www.econ.uconn.edu/working/2006-22r.pdf
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Publisher Info
Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2006-22.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 28 pages
Date of creation: Jun 2006
Date of revision: Mar 2007
Handle: RePEc:uct:uconnp:2006-22

Note: We acknowledge the comments of participants at the Takings Conference at the University of California, Santa Barbara, May 12-13, 2006.
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Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
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Related research
Keywords: Eminent domain; holdout problem; bargaining;

Other versions of this item:

Find related papers by JEL classification:
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
K11 - Law and Economics - - Basic Areas of Law - - - Property Law
R14 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Land Use Patterns
R52 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Menezes, Flavio Marques & Pitchford, Rohan, 2001. "Chasing Patents," Economics Working Papers (Ensaios Economicos da EPGE) 411, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  2. Cohen, Lloyd, 1991. "Holdouts and Free Riders," Journal of Legal Studies, University of Chicago Press, vol. 20(2), pages 351-62, June.
  3. Blume, Lawrence & Rubinfeld, Daniel L & Shapiro, Perry, 1984. "The Taking of Land: When Should Compensation Be Paid?," The Quarterly Journal of Economics, MIT Press, vol. 99(1), pages 71-92, February. [Downloadable!] (restricted)
  4. Hermalin, Benjamin E, 1995. "An Economic Analysis of Takings," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 64-86, April.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Steven Shavell, 2007. "Eminent Domain Versus Government Purchase of Land Given Imperpect Information About Owners' Valuation," NBER Working Papers 13564, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Thomas J. Miceli & Kathleen Segerson & C. F. Sirmans, 2007. "Tax Motivated Takings," Working papers 2007-43, University of Connecticut, Department of Economics. [Downloadable!]
  3. Kurtis Swope, Pamela Schmitt, John Cadigan and Robert Shupp, 2008. "An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game," Departmental Working Papers 21, United States Naval Academy Department of Economics. [Downloadable!]
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This page was last updated on 2009-11-24.

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