A Positive Theory of Eminent Domain

Abstract:     
By examining a novel data set of land acquisitions and condemnations for roads by all 50 states, this article attempts to formulate a positive theory of states' invocation of their eminent domain power. Litigation models based on irrationality and asymmetric information suggest that geography, demography, and legal rules may influence the frequency with which state officials resort to condemnation. To a significant degree, the data support these models, as water area and hilliness (geography), population density (demography), and legal rules (fee-shifting statutes) explain a significant portion of the state-state variation in condemnation rates. A number of other theoretically relevant explanatory variables do not seem to influence the level of eminent domain in a state (length of coastline, unusual constitutional takings provisions, political party in power, population growth rate, and economic growth rate). Finally we consider the difference between the model's predicted condemnation rate and the rate reported by each state. Some states can justify their seemingly high condemnation rates based on their geography and demography (e.g. Rhode Island's high condemnation rate is largely explained by it population density and large water area); some missing explanatory variables seem necessary to explain those states for which there are large residuals (e.g. Florida's large positive residual; Delaware's large negative residual).

Keywords: condemnation, takings eminent domain

JEL Classifications: K11, K41, D82, H4, H82, J10

Working Paper Series