Working Paper

Private takings

Abstract: This paper considers the implications associated with a recent Supreme Court ruling that can be interpreted as supporting the use of eminent domain in transferring the property rights of one private agent?a landowner?to another private agent?a developer. Compared to voluntary exchange, when property rights are transferred via eminent domain, landowners? investments in their properties become more inefficient and, as a result, any benefit associated with mitigating the holdout problem between landowners and the developer is reduced. Social welfare can only increase if the holdout problem is significant; otherwise, social welfare will fall when property rights are transferred via eminent domain.

Keywords: Eminent domain;

https://doi.org/10.26509/frbc-wp-200713

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers (Old Series)

Publication Date: 2007

Number: 0713