A Bargaining Model of Holdouts and Takings
AbstractThe 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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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2006-22.
Length: 28 pages
Date of creation: Jun 2006
Date of revision: Mar 2007
Note: We acknowledge the comments of participants at the Takings Conference at the University of California, Santa Barbara, May 12-13, 2006.
Contact details of provider:
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/
More information through EDIRC
Eminent domain; holdout problem; bargaining;
Other versions of this item:
- 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, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
- R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-13 (All new papers)
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.:
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- 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.
- Thomas Miceli, 2011.
"Free riders, holdouts, and public use: a tale of two externalities,"
Springer, vol. 148(1), pages 105-117, July.
- 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.
- Céline Grislain-Letrémy & Bertrand Villeneuve, 2011. "Natural and Industrial Disasters : Land Use and Insurance," Working Papers 2011-32, Centre de Recherche en Economie et Statistique.
- 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.
- John Cadigan & Pamela Schmitt & Robert Shupp & Kurtis Swope1, 2009.
"An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game,"
Southern Economic Journal,
Southern Economic Association, vol. 76(2), pages 344-457, October.
- Kurtis Swope & Pamela Schmitt & John Cadigan & 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.
- Parente, Michael D. & Winn, Abel M., 2012. "Bargaining behavior and the tragedy of the anticommons," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 475-490.
- Miceli, Thomas J. & Sirmans, C.F., 2007. "The holdout problem, urban sprawl, and eminent domain," Journal of Housing Economics, Elsevier, vol. 16(3-4), pages 309-319, November.
- Cadigan, John & Schmitt, Pamela & Shupp, Robert & Swope, Kurtis, 2011.
"The holdout problem and urban sprawl: Experimental evidence,"
Journal of Urban Economics,
Elsevier, vol. 69(1), pages 72-81, January.
- Kurtis Swope & Pamela Schmitt & John Cadigan & Robert Shupp, 2009. "The Holdout Problem and Urban Sprawl: Experimental Evidence," Departmental Working Papers 24, United States Naval Academy Department of Economics.
- Kurtis Swope & Pamela Schmitt & John Cadigan & Ryan Wielgus, 2010. "Contracts, Behavior, and the Land-Assembly Problem:An Experimental Study," Departmental Working Papers 29, United States Naval Academy Department of Economics.
- Thomas J. Miceli & Kathleen Segerson & C. F. Sirmans, 2007. "Tax Motivated Takings," Working papers 2007-43, University of Connecticut, Department of Economics.
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