Private Takings

24 Pages Posted: 17 Oct 2007 Last revised: 23 Oct 2007

See all articles by Ed Nosal

Ed Nosal

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Date Written: October 2007

Abstract

This paper considers the implications associated with a recent Supreme Court ruling that can be interpreted as supporting the use of eminent domain in transferring the property rights of one private agent - a landowner - to another private agent - a developer. Compared to voluntary exchange, when property rights are transferred via eminent domain, landowners' investments in their properties become more inefficient and, as a result, any any benefit associated with mitigating the holdout problem between landowners and the developer is reduced. Social welfare can only increase if the holdout problem is significant; otherwise, social welfare will fall when property rights are transferred via eminent domain.

Keywords: eminent domain, social welfare, property rights, holdout problem, bargaining

JEL Classification: C7, D61, H11, P14

Suggested Citation

Nosal, Ed, Private Takings (October 2007). Federal Reserve Bank of Cleveland Working Paper No. 07-13. Available at SSRN: https://ssrn.com/abstract=1021812 or http://dx.doi.org/10.2139/ssrn.1021812

Ed Nosal (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

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