A Bargaining Model of Holdouts and Takings

Posted: 16 Jun 2008

See all articles by Thomas J. Miceli

Thomas J. Miceli

University of Connecticut - Department of Economics

Kathleen Segerson

University of Connecticut - Department of Economics

Date Written: Spring 2007

Abstract

The holdout problem is commonly cited as the justification for eminent domain, but the nature of the problem is not well understood. This article models the holdout problem in a bargaining framework, where a developer seeks to acquire several parcels of land for a large-scale development. We show that in the absence of eminent domain, holdouts are a significant threat, resulting in costly delay. However, if the developer has the power to use eminent domain to acquire the land from holdouts, all sellers will bargain, thus avoiding delay. An offsetting cost is that owners may negotiate prices below their true value, possibly resulting in excessive transfer of land to the developer.

Keywords: C78, K11, R14, R52

Suggested Citation

Miceli, Thomas J. and Segerson, Kathleen, A Bargaining Model of Holdouts and Takings (Spring 2007). American Law and Economics Review, Vol. 9, Issue 1, pp. 160-174, 2007. Available at SSRN: https://ssrn.com/abstract=1145987 or http://dx.doi.org/10.1093/aler/ahm005

Thomas J. Miceli (Contact Author)

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-5810 (Phone)
860-486-4463 (Fax)

Kathleen Segerson

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-4567 (Phone)
860-486-4463 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
351
PlumX Metrics