Development Derailed: Policy Uncertainty and Coordinated Investment
Eric Alston and
Steven M. Smith
Journal of Law and Economics, 2022, vol. 65, issue 1, 39 - 76
We quantify the sensitivity of investments to policy uncertainty by drawing on the Northern Pacific’s massive land grant and the ensuing political battle that generated significant uncertainty to title from 1879 to 1894. Focusing on irrigation because of its high asset specificity, our analysis exploits the spatially exogenous extent of the grant to identify causal effects on investment, inclusive of spillovers to secure land because coordinated investment is generally necessary to capture the scale economies of irrigation. We find that the uncertainty significantly deterred and delayed irrigation investment in Montana, which lowered the state’s economic activity by up to 5 percent.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to the online full text or PDF requires a subscription.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlawec:doi:10.1086/715832
Access Statistics for this article
More articles in Journal of Law and Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().