Loggers Vs. Campers: Compensation for the Taking of Property Rights

17 Pages Posted: 15 Feb 2004 Last revised: 30 Oct 2007

See all articles by Ron Giammarino

Ron Giammarino

University of British Columbia (UBC) - Sauder School of Business

Ed Nosal

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Multiple version iconThere are 2 versions of this paper

Date Written: February 9, 2004

Abstract

Governments often have the power to take property rights from private citizens but their responsibility to pay compensation is typically not well specified. In this paper we examine how the compensation rule adopted by a country affects both private investment decisions and takings decisions. We build on a widely accepted argument that any lump sum compensation, including zero, is the socially optimal compensation scheme. The lump sum compensation result hinges critically on the assumptions that the government maximizes social welfare and that the level of private investment does not affect the alternative use of the property rights. We find that when either of these assumptions are relaxed, the optimal compensation scheme will generally depend upon market values. The model presented here provides strong support for market value compensation for the taking of property rights in modern societies.

Keywords: takings, market value compensation, property rights

JEL Classification: D63, G18, G31, K22

Suggested Citation

Giammarino, Ronald and Nosal, Ed, Loggers Vs. Campers: Compensation for the Taking of Property Rights (February 9, 2004). Sauder School of Business Working Paper; FRB of Cleveland Working Paper No. 04-06. Available at SSRN: https://ssrn.com/abstract=501462 or http://dx.doi.org/10.2139/ssrn.501462

Ronald Giammarino (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
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Canada
604-822-8357 (Phone)
604-822-4695 (Fax)

Ed Nosal

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

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

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