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Fair and Efficient Compensation for Taking Property under Uncertainty

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  • T. NICOLAUS TIDEMAN
  • FLORENZ PLASSMANN

Abstract

Existing mechanisms for managing eminent domain suggest that, when there is uncertainty about whether a government will take property, efficiency requires that the property owner receive at most partial compensation. We argue that announcing the possibility of a taking is itself a taking when this implies that further investments will not be compensated. We argue that it is both fair and efficient to require governments to compensate owners for losses in asset value from such announcements. We propose a mechanism that provides incentives for both efficient investment and efficient takings, while paying full compensation for expected losses under efficient behavior.

Suggested Citation

  • T. Nicolaus Tideman & Florenz Plassmann, 2005. "Fair and Efficient Compensation for Taking Property under Uncertainty," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(3), pages 471-495, August.
    • Handle: RePEc:bla:jpbect:v:7:y:2005:i:3:p:471-495
    DOI: 10.1111/j.1467-9779.2005.00213.x
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    Cited by:

    1. Thomas J. Miceli & Kathleen Segerson, 2011. "Regulatory Takings," Working papers 2011-16, University of Connecticut, Department of Economics.
    2. Hans-Bernd Schäfer & Ram Singh, 2018. "Takings of Land by Self-Interested Governments: Economic Analysis of Eminent Domain," Journal of Law and Economics, University of Chicago Press, vol. 61(3), pages 427-459.
    3. Florenz Plassmann & T. Nicolaus Tideman, 2008. "Accurate Valuation in the Absence of Markets," Public Finance Review, , vol. 36(3), pages 334-358, May.
    4. Dieter Gstach, 2009. "A Property Taxation Mechanism With Self‐Assessment," Metroeconomica, Wiley Blackwell, vol. 60(3), pages 400-408, July.
    5. Florenz Plassmann & T. Nicolaus Tideman, 2007. "Efficient Urban Renewal Without Takings: Two Solutions to the Land Assembly Problem," Working Papers e07-8, Virginia Polytechnic Institute and State University, Department of Economics.
    6. Paul Pecorino, 2013. "Compensation for Regulatory Takings with a Redistributive Government," Southern Economic Journal, John Wiley & Sons, vol. 80(2), pages 488-501, October.
    7. Asaf Friedman Arch, 2014. "Sustainable Urban Renewal: The Tel Aviv Dilemma," Sustainability, MDPI, vol. 6(5), pages 1-11, April.

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