Working Paper: NBER ID: w13564
Authors: Steven Shavell
Abstract: Governments employ two basic policies for acquiring land: taking it through exercise of their power of eminent domain; and purchasing it. The social desirability of these two policies is compared in a model in which the government's information about landowners' valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land only if an owner's valuation is low enough that he is willing to sell it. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government's acquisition will fail if any of the owners refuses to sell. Hence, the policy of eminent domain becomes appealing if the number of owners of the land is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead may be located anywhere in a region.
Keywords: No keywords provided
JEL Codes: D8; K11; H1; H4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government purchase (H57) | social desirability (Z13) |
| number of landowners low (Q15) | government purchase is socially desirable (H49) |
| number of landowners increases (Q15) | likelihood of rejection of government offer increases (D72) |
| number of landowners high (Q15) | probability of successful purchase tends to zero (D41) |
| number of landowners high (Q15) | eminent domain socially desirable (H13) |
| government needs specific parcel of land (H82) | eminent domain superior to purchase (H13) |
| government seeks dispersed land (H82) | advantages of eminent domain diminish (H13) |
| distribution of owners' valuations (D39) | social welfare implications of policies (I38) |