Marginal Cost Pricing and Efficient Taking under Uncertainty
AbstractWe describe a mechanism for government taking under uncertainty that provides incentives for governments to make efficient taking decisions and for property owners to use their properties efficiently. We argue that efficiency in takings requires that governments not only pay the value of property when it is taken but also pay the reduction in property value that they cause when identifying properties as potential targets of takings. This is a straightforward application of the general principle of marginal cost pricing. Unlike existing proposals to improve the efficiency of takings, our mechanism requires governments to pay amounts that are sufficient to fully compensate property owners for their losses.
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Bibliographic InfoPaper provided by Virginia Polytechnic Institute and State University, Department of Economics in its series Working Papers with number e07-7.
Length: 11 pages
Date of creation: 2007
Date of revision:
Uncertainty; Government; Efficient Property Use;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-05 (All new papers)
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