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Land Acquisition for Industrialization and Compensation of Displaced Farmers

Author

Listed:
  • Dilip Mookherjee

    () (Department of Economics, Boston University)

  • Maitreesh Ghatak

    (London School of Economics, and BREAD)

Abstract

This paper addresses the question of how farmers displaced by acquisition of agricultural land for the purpose of industrialization ought to be compensated. Prior to acquisition, the farmers are leasing in land from a landlord, either a private owner or a local government. There are three sets of relevant incentive e ects in the model: the decision of the landlord to sell the land ex post to an industrial developer, and ex ante incentives of tenants and landlord to make speci c investments in agricultural quality of the land. Our main result is that under a broad class of circumstances, eciency considerations require farmers be over-compensated for their loss of agricultural income in the event of conversion.

Suggested Citation

  • Dilip Mookherjee & Maitreesh Ghatak, 2010. "Land Acquisition for Industrialization and Compensation of Displaced Farmers," Boston University - Department of Economics - Working Papers Series WP2010-039, Boston University - Department of Economics.
  • Handle: RePEc:bos:wpaper:wp2010-039
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    References listed on IDEAS

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    1. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    2. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    3. Maitreesh Ghatak & Parikshit Ghosh, 2011. "The Land Acquisition Bill-- A Critique and a Proposal," Working papers 204, Centre for Development Economics, Delhi School of Economics.
    4. Pranab Bardhan & Dilip Mookherjee, 2011. "Subsidized Farm Input Programs and Agricultural Performance: A Farm-Level Analysis of West Bengal's Green Revolution, 1982-1995," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 186-214, October.
    5. ., 2013. "Intellectual property rights," Chapters,in: Law and Economics for Civil Law Systems, chapter 9, pages 299-372 Edward Elgar Publishing.
    6. Miceli, Thomas J. & Segerson, Kathleen, 2007. "The Economics of Eminent Domain: Private Property, Public Use, and Just Compensation," Foundations and Trends(R) in Microeconomics, now publishers, vol. 3(4), pages 275-329, July.
    7. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, Elsevier.
    8. Lawrence Blume & Daniel L. Rubinfeld & Perry Shapiro, 1984. "The Taking of Land: When Should Compensation Be Paid?," The Quarterly Journal of Economics, Oxford University Press, vol. 99(1), pages 71-92.
    9. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-367, June.
    10. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
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    12. Guangzhong Cao & Changchun Feng & Ran Tao, 2008. "Local "Land Finance" in China's Urban Expansion: Challenges and Solutions," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(2), pages 19-30.
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    14. Abhijit V. Banerjee & Paul J. Gertler & Maitreesh Ghatak, 2002. "Empowerment and Efficiency: Tenancy Reform in West Bengal," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 239-280, April.
    15. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    Citations

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    Cited by:

    1. Sonia Bhalotra & Abhishek Chakravarty & Dilip Mookherjee & Francisco J. Pino, "undated". "Property Rights and Gender Bias: Evidence from Land Reform in West Bengal," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-281, Boston University - Department of Economics.
    2. repec:oxf:wpaper:wps/2015-04 is not listed on IDEAS
    3. Kleemann, Linda & Thiele, Rainer, 2015. "Rural welfare implications of large-scale land acquisitions in Africa: A theoretical framework," Economic Modelling, Elsevier, vol. 51(C), pages 269-279.
    4. Jain, Sanjay & Majumdar, Sumon & Mukand, Sharun W, 2014. "Walk the line: Conflict, state capacity and the political dynamics of reform," Journal of Development Economics, Elsevier, vol. 111(C), pages 150-166.
    5. Deininger, Klaus & Hilhorst, Thea & Songwe, Vera, 2014. "Identifying and addressing land governance constraints to support intensification and land market operation: Evidence from 10 African countries," Food Policy, Elsevier, vol. 48(C), pages 76-87.
    6. Bhattacharya, Sourav & Kundu, Tapas, 2014. "Resistance, redistribution and investor-friendliness," Journal of Development Economics, Elsevier, vol. 109(C), pages 124-142.
    7. repec:eee:foreco:v:29:y:2017:i:pa:p:14-24 is not listed on IDEAS
    8. Hans-Bernd Schäfer & Ram Singh, 2017. "Takings of Land by Self-interested Governments Economic Analysis of Eminent Domain," Working papers 281, Centre for Development Economics, Delhi School of Economics.

    More about this item

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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