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Public goods, taxes, and takings

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  • Miceli, Thomas J.

Abstract

Blume, Rubinfeld, and Shapiro [Blume, L., Rubinfeld, D., & Shapiro, P. (1984). The taking of law: When should compensation be paid? Quarterly Journal of Economics, 99, 71-92] first showed that compensation for takings can lead to a moral hazard problem that results in overinvestment in land suitable for public use. To the contrary, this paper shows that when compensation is financed by a proportional property tax, the compensation rule is irrelevant regarding the level of investment landowners make in their property, as well as the amount of land they authorize the government to acquire, both of which will be efficient. Intuitively, landowners recognize the equivalence of taxes and takings in budgetary terms, causing the distortionary effects of compensation and property taxation to cancel each other out through the balanced budget condition.

Suggested Citation

  • Miceli, Thomas J., 2008. "Public goods, taxes, and takings," International Review of Law and Economics, Elsevier, vol. 28(4), pages 287-293, December.
    • Handle: RePEc:eee:irlaec:v:28:y:2008:i:4:p:287-293
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    References listed on IDEAS

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    1. Nosal, Ed, 2001. "The taking of land: market value compensation should be paid," Journal of Public Economics, Elsevier, vol. 82(3), pages 431-443, December.
    2. Hermalin, Benjamin E, 1995. "An Economic Analysis of Takings," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(1), pages 64-86, April.
    3. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," American Economic Review, American Economic Association, vol. 95(2), pages 329-333, May.
    4. Miceli, Thomas J & Segerson, Kathleen, 1994. "Regulatory Takings: When Should Compensation Be Paid?," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 749-776, June.
    5. Bernheim, B Douglas & Bagwell, Kyle, 1988. "Is Everything Neutral?," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 308-338, April.
    6. Cohen, Lloyd, 1991. "Holdouts and Free Riders," The Journal of Legal Studies, University of Chicago Press, vol. 20(2), pages 351-362, June.
    7. Fischel, William A., 1995. "The offer/ask disparity and just compensation for takings: A constitutional choice perspective," International Review of Law and Economics, Elsevier, vol. 15(2), pages 187-203, June.
    8. Fischel, William A. & Shapiro, Perry, 1989. "A constitutional choice model of compensation for takings," International Review of Law and Economics, Elsevier, vol. 9(2), pages 115-128, December.
    9. Fischel, William A & Shapiro, Perry, 1988. "Takings, Insurance, and Michelman: Comments on Economic Interpretations of "Just Compensation" Law," The Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 269-293, June.
    10. Ghosh, Shubha, 1997. "Takings, the exit option and just compensation," International Review of Law and Economics, Elsevier, vol. 17(2), pages 157-176, June.
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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. Paul Pecorino, 2013. "Compensation for Regulatory Takings with a Redistributive Government," Southern Economic Journal, John Wiley & Sons, vol. 80(2), pages 488-501, October.

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    More about this item

    Keywords

    Compensation for takings Eminent domain Moral hazard Public goods;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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