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 InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2009-01.
Date of creation: Jan 2009
Date of revision:
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More information through EDIRC
Eminent domain; free riders; holdouts; public use; takings;
Other versions of this item:
- Thomas Miceli, 2011. "Free riders, holdouts, and public use: a tale of two externalities," Public Choice, Springer, vol. 148(1), pages 105-117, July.
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-17 (All new papers)
- NEP-LAW-2009-01-17 (Law & Economics)
- NEP-PBE-2009-01-17 (Public Economics)
- NEP-PPM-2009-01-17 (Project, Program & Portfolio Management)
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.:
- Thomas Miceli & Kathleen Segerson, 2006.
"A Bargaining Model of Holdouts and Takings,"
2006-22, University of Connecticut, Department of Economics, revised Mar 2007.
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- Friedmann, Daniel, 1989. "The Efficient Breach Fallacy," The Journal of Legal Studies, University of Chicago Press, vol. 18(1), pages 1-24, January.
- Flavio Menezes & Rohan Pitchford, 2004. "A model of seller holdout," Economic Theory, Springer, vol. 24(2), pages 231-253, August.
- Miceli, Thomas J. & Segerson, Kathleen & Sirmans, C.F., 2008. "Tax Motivated Takings," National Tax Journal, National Tax Association, vol. 61(4), pages 579-91, December .
- 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.
- Strange William C., 1995. "Information, Holdouts, and Land Assembly," Journal of Urban Economics, Elsevier, vol. 38(3), pages 317-332, November.
- 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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