Abstract

http://ssrn.com/abstract=1023100
 
 

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Eminent Domain versus Government Purchase of Land Given Imperfect Information about Owners' Valuations


Steven Shavell


Harvard Law School; National Bureau of Economic Research (NBER)

October 2007

Harvard Law and Economics Discussion Paper No. 598

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.

Number of Pages in PDF File: 40

JEL Classification: D8, K11, H1, H4

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Date posted: October 20, 2007  

Suggested Citation

Shavell, Steven, Eminent Domain versus Government Purchase of Land Given Imperfect Information about Owners' Valuations (October 2007). Harvard Law and Economics Discussion Paper No. 598. Available at SSRN: http://ssrn.com/abstract=1023100 or http://dx.doi.org/10.2139/ssrn.1023100

Contact Information

Steven Shavell (Contact Author)
Harvard Law School ( email )
1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-495-3668 (Phone)
617-496-2256 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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