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Efficient Urban Renewal Without Takings: Two Solutions to the Land Assembly Problem

  • Florenz Plassmann
  • T. Nicolaus Tideman
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    When urban renewal projects require that smaller parcels be assembled into a single large one, owners who hold out for higher prices may either prevent or significantly delay socially efficient redevelopment. Local governments seeking private redevelopment currently have only the choice between either hoping that private bargaining will lead to efficient land assembly or taking the properties of these owners under eminent domain. We describe two mechanisms that solve the holdout problem and lead to efficiency in land assembly without resorting to governmental takings.

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    Paper provided by Virginia Polytechnic Institute and State University, Department of Economics in its series Working Papers with number e07-8.

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    Length: 23 pages
    Date of creation: 2007
    Date of revision:
    Handle: RePEc:vpi:wpaper:e07-8
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    1. Theodore Groves & Martin Loeb, 1974. "Incentives and Public Inputs," Discussion Papers 29, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
    3. McFarlane, Alastair, 1999. "Taxes, Fees, and Urban Development," Journal of Urban Economics, Elsevier, vol. 46(3), pages 416-436, November.
    4. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    5. Tideman, T Nicolaus & Tullock, Gordon, 1976. "A New and Superior Process for Making Social Choices," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1145-59, December.
    6. Thomas J. Miceli & C. F. Sirmans, 2004. "The Holdout Problem and Urban Sprawl," Working papers 2004-38, University of Connecticut, Department of Economics.
    7. Cohen, Lloyd, 1991. "Holdouts and Free Riders," The Journal of Legal Studies, University of Chicago Press, vol. 20(2), pages 351-62, June.
    8. Menezes, Flavio & Pitchford, Rohan, 2004. "The land assembly problem revisited," Regional Science and Urban Economics, Elsevier, vol. 34(2), pages 155-162, March.
    9. O'Flaherty, Brendan, 1994. "Land assembly and urban renewal," Regional Science and Urban Economics, Elsevier, vol. 24(3), pages 287-300, June.
    10. Horowitz, John K., 2006. "The Becker-DeGroot-Marschak mechanism is not necessarily incentive compatible, even for non-random goods," Economics Letters, Elsevier, vol. 93(1), pages 6-11, October.
    11. Jan K. Brueckner, 2000. "Urban Sprawl: Diagnosis and Remedies," International Regional Science Review, , vol. 23(2), pages 160-171, April.
    12. Sanford J. Grossman & Oliver D. Hart, 1980. "Takeover Bids, the Free-Rider Problem, and the Theory of the Corporation," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 42-64, Spring.
    13. Asami, Yasushi, 1985. "A game-theoretic approach to the division of profits from economic land development," Regional Science and Urban Economics, Elsevier, vol. 18(2), pages 233-246, May.
    14. Eckart, Wolfgang, 1985. "On the land assembly problem," Journal of Urban Economics, Elsevier, vol. 18(3), pages 364-378, November.
    15. T. Nicolaus Tideman & Florenz Plassmann, 2005. "Fair and Efficient Compensation for Taking Property under Uncertainty," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(3), pages 471-495, 08.
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