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Land Development Restrictions and Preemptive Action- On the benefits of differentiated regulation

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  • Lange, Andreas
  • Liu, Xiangping

Abstract

We address the problem of preemptive land development to avoid future regulation. We demonstrate that differentiated treatment of landowners is generally essential to optimally deal with preemption. While differentiated policies improve welfare, they require the regulator to be informed about landowners' types. We use a mechanism design approach to deal with the case of asymmetric information. We show how a differentiated treatment of landowners is still feasible and beneficial. Our mechanism allows some landowners to face less stringent future regulation levels against a payment that is made ex ante or is anticipated ex ante. More generally, agents (landowners) may voluntarily commit to more stringent regulation if this gives them more leniency earlier or later. Our paper thereby shows the advantages of allowing such trade-offs by linking regulation across multiple periods.
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Suggested Citation

  • Lange, Andreas & Liu, Xiangping, 2013. "Land Development Restrictions and Preemptive Action- On the benefits of differentiated regulation," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151283, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:151283
    DOI: 10.22004/ag.econ.151283
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    References listed on IDEAS

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    1. Robert Innes & Stephen Polasky & John Tschirhart, 1998. "Takings, Compensation and Endangered Species Protection on Private Lands," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 35-52, Summer.
    2. Innes, Robert, 1997. "Takings, Compensation, and Equal Treatment for Owners of Developed and Undeveloped Property," Journal of Law and Economics, University of Chicago Press, vol. 40(2), pages 403-432, October.
    3. Miceli, Thomas J & Segerson, Kathleen, 1994. "Regulatory Takings: When Should Compensation Be Paid?," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 749-776, June.
    4. Lueck, Dean & Michael, Jeffrey A, 2003. "Preemptive Habitat Destruction under the Endangered Species Act," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 27-60, April.
    5. Smith, Rodney B. W. & Shogren, Jason F., 2002. "Voluntary Incentive Design for Endangered Species Protection," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 169-187, March.
    6. John A. List & Michael Margolis & Daniel E. Osgood, 2006. "Is the Endangered Species Act Endangering Species?," NBER Working Papers 12777, National Bureau of Economic Research, Inc.
    7. Langpap, Christian & Wu, JunJie, 2004. "Voluntary conservation of endangered species: when does no regulatory assurance mean no conservation?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 435-457, May.
    8. Daniel Rondeau & Erwin Bulte, 2007. "Wildlife Damage and Agriculture: A Dynamic Analysis of Compensation Schemes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 490-507.
    9. Thomas J. Miceli & Kathleen Segerson, 2011. "Regulatory Takings," Working papers 2011-16, University of Connecticut, Department of Economics.
    10. Langpap, Christian, 2006. "Conservation of endangered species: Can incentives work for private landowners?," Ecological Economics, Elsevier, vol. 57(4), pages 558-572, June.
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    More about this item

    Keywords

    Land Economics/Use;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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