Takings, litigation, and just compensation

Alfredo Esposto

Atlantic Economic Journal, 1998, vol. 26, issue 4, 397-412

Abstract: A constitutional right to just compensation for governmental takings implies a right to a judicial review of the adequacy of the compensation. Thus, a property owner, subjected to a takings action, can threaten to litigate if he considers compensation insufficient. This paper uses a theoretic settlement-litigation analysis to demonstrate how the litigation threat influences the size of the compensation. In addition, it revises the theoretical explanation for earlier empirical findings that certain classes of property owners often receive more than market value for their property. It is also shown that the just compensation mechanism cannot guarantee efficient takings. Extending the basic model to regulatory takings, this paper demonstrates that recent changes in the judicial doctrine of when a regulation has gone too far and demands compensation has strengthened the litigation threat of property owners. It explains why political decisionmakers are moving toward settlements with terms which are increasingly defined by legislation. Copyright International Atlantic Economic Society 1998

Date: 1998
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DOI: 10.1007/BF02299452

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