Business Formation in the Wake of States' Responses to Kelo

Journal of Accounting and Finance, Vol. 13(5), 2013

Posted: 24 Aug 2013

See all articles by Ramon P. DeGennaro

Ramon P. DeGennaro

University of Tennessee, Knoxville - Department of Finance

Tianning Li

Hood College

Date Written: May 22, 2013

Abstract

The U.S. Supreme Court ruling in Kelo v. New London (2005) allows governments to take private property for transfer to new private owners to promote “economic development.” Our theoretical model shows that business creation can be encouraged, unaffected, or discouraged as the probability of takings increases, depending on the level of compensation and the owners' public use benefits. Empirical results indicate that states can pass laws protecting property rights without fear of retarding business formation, so long as compensation is economically fair. We explain why Kelo and these laws do not measurably affect business formation in our empirical work.

Keywords: Kelo, eminent domain, Business Formation

JEL Classification: K11

Suggested Citation

DeGennaro, Ramon P. and Li, Tianning, Business Formation in the Wake of States' Responses to Kelo (May 22, 2013). Journal of Accounting and Finance, Vol. 13(5), 2013, Available at SSRN: https://ssrn.com/abstract=2314688

Ramon P. DeGennaro (Contact Author)

University of Tennessee, Knoxville - Department of Finance ( email )

423 Stokely Management Center
Knoxville, TN 37996
United States
865-974-1726 (Phone)
865-974-1716 (Fax)

Tianning Li

Hood College ( email )

401 Rosemont Avenue
Frederick, MD 21701
United States

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