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Political Economy and the Efficiency of Compensation for Takings

26 Pages Posted: 6 Dec 2005  

Tim Brennan

University of Maryland, Baltimore County - Department of Public Policy; Resources for the Future

James Boyd

Resources for the Future

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Abstract

To assess compensation for regulation-induced "takings," we model political support for regulation as a function of externalities, landowner wealth, and tax burdens. When competing social interests have equal influence on political outcomes compensation should not be paid. However, when environmentalists and property owners have unequal influence the model yields several counterintuitive implications. For example, disenfranchised environmentalists should support takings compensation, since it reduces landowner opposition to regulation. We also show how compensation rules can limit the deadweight social costs of income transfers, while recognizing their effects on regulator and landowner behavior.

Keywords: regulatory takings, compensation, political economy

JEL Classification: K11, D72, L51

Suggested Citation

Brennan, Tim and Boyd, James, Political Economy and the Efficiency of Compensation for Takings. Contemporary Economic Policy, Vol. 24, 2005. Available at SSRN: https://ssrn.com/abstract=867108

Tim Brennan (Contact Author)

University of Maryland, Baltimore County - Department of Public Policy ( email )

1000 Hilltop Circle
Baltimore, MD 21250
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410-455-3229 (Phone)
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Resources for the Future ( email )

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Washington, DC 20036
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James William Boyd

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5013 (Phone)
202-939-3460 (Fax)

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