Takings, Fiscal Illusion, and the Median Voter
Forthcoming in 173 Journal of Institutional and Theoretical Economics (JITE), 173(1) (2017)
6 Pages Posted: 3 Aug 2016
Date Written: August 2, 2016
Schweizer (2017) provides a powerful and general way of using compensation payments to induce efficient actions. Its application to takings under fiscal illusion, however, is problematic. A better model would assume that the government decides to take property by considering effects on the median voter. Under that assumption, payments based on the market value of land, assuming non-excessive investment, induce efficient action by both landowners and the government.
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