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Holdout and Eminent Domain in Land Acquisition

Indrāni Roy Chowdhury and Prabal Roy Chowdhury ()

Indian Economic Review, 2016, vol. 51, issue 1, 1-19

Abstract: This paper examines the welfare implications of imposing eminent domain laws in a multilateral dynamic bargaining framework with one buyer, and multiple land sellers. We establish that if the minimal level of compensation is set at the 'right' level then eminent domain laws can be helpful. To be precise if the buyer is a 'small' one, then eminent domain laws are not just efficiency improving, but also lead to a Pareto improvement.The issue is a nuanced one however. For one, if the buyer is 'large' one, then eminent domain would improve seller payoff, but will have no efficiency implications. For another, in case the bargaining process is transparent, such laws may affect the sellers differentially; while some may gain, others may be adversely affected.

Keywords: Eminent Domain; Holdout; Compensation; Multi-person Bargaining; Efficiency; Secret Offers; Public Offers. (search for similar items in EconPapers)
JEL-codes: C78 D23 D62 L14 (search for similar items in EconPapers)
Date: 2016
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Indian Economic Review is currently edited by Pami Dua (Editor) & Ram Singh (Associate Editor) and Sunil Kanwar

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