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Political Economy And The Efficiency Of Compensation For Takings




To assess compensation for regulation-induced "takings," the authors model political support for regulation as a function of externalities, landowner wealth, and tax burdens. When competing social interests have equal influence on political outcomes, compensation should not be paid. However, when environmentalists and property owners have unequal influence, the model yields several counterintuitive implications. For example, disenfranchised environmentalists should support takings compensation, since it reduces landowner opposition to regulation. The authors also show how compensation rules can limit the deadweight social costs of income transfers, while recognizing their effects on regulator and landowner behavior. (JEL "K11", "D72", "L51") Copyright 2006 Western Economic Association International.

Suggested Citation

  • Timothy J. Brennan & James Boyd, 2006. "Political Economy And The Efficiency Of Compensation For Takings," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 188-202, January.
  • Handle: RePEc:bla:coecpo:v:24:y:2006:i:1:p:188-202

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    References listed on IDEAS

    1. Sole Olle, Albert, 2003. "Electoral accountability and tax mimicking: the effects of electoral margins, coalition government, and ideology," European Journal of Political Economy, Elsevier, vol. 19(4), pages 685-713, November.
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    Cited by:

    1. Emma Aisbett & Larry Karp & Carol Mcausland, 2010. "Police Powers, Regulatory Takings and the Efficient Compensation of Domestic and Foreign Investors," The Economic Record, The Economic Society of Australia, vol. 86(274), pages 367-383, September.
    2. Brennan, Timothy J. & Kousky, Carolyn & Macauley, Molly K., 2009. "More Than a Wing and a Prayer: Government Indemnification of the Commercial Space Launch Industry," Discussion Papers dp-09-38, Resources For the Future.
    3. Brennan, Timothy & Boyd, James, 1996. "Pluralism and Regulatory Failure: When Should Takings Trigger Compensation?," Discussion Papers dp-96-09, Resources For the Future.
    4. Robert Innes & George Frisvold, 2009. "The Economics of Endangered Species," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 485-512, September.
    5. Brennan, Timothy J., 2008. "“Night of the Living Dead” or “Back to the Future”? Electric Utility Decoupling, Reviving Rate-of-Return Regulation, and Energy Efficiency," Discussion Papers dp-08-27, Resources For the Future.
    6. Timothy Brennan, 2010. "Decoupling in electric utilities," Journal of Regulatory Economics, Springer, vol. 38(1), pages 49-69, August.
    7. Brennan, Timothy J., 2009. "The Challenges of Climate for Energy Markets," Discussion Papers dp-09-32, Resources For the Future.
    8. Timothy J. Brennan, 2010. "The Challenges of Climate Policy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 225-239.

    More about this item

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation


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