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The use of eminent domain in land assembly: The case of the Tennessee Valley Authority

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  • Carl Kitchens

Abstract

Eminent domain gives public agencies the right to acquire property from private individuals in exchange for just compensation. Following Kelo vs. New London 2005, the powers of eminent domain were extended, opening the door for potential abuses of power by government officials. In this paper, I empirically investigate the use of eminent domain using newly digitized records from the Tennessee Valley Authority (TVA), which extensively used eminent domain to construct dams in the 1930s. Using a sample of families living in one reservoir location, I find empirical evidence that land tenure, the number of property holdings, and debt levels affected the holdout decision, suggesting that holdouts are individuals with high subjective values. I then develop a screening model with asymmetric information in seller valuations to predict when eminent domain will be used and what settlement values and court awards would be. I test the model’s and find that individuals who held out increased their property value by about 5 %, and incentives to holdout existed only for individuals who received initially low settlement proposals. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Carl Kitchens, 2014. "The use of eminent domain in land assembly: The case of the Tennessee Valley Authority," Public Choice, Springer, vol. 160(3), pages 455-466, September.
    • Handle: RePEc:kap:pubcho:v:160:y:2014:i:3:p:455-466
    DOI: 10.1007/s11127-013-0102-x
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    References listed on IDEAS

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    6. Kitchens, Carl, 2014. "The Role of Publicly Provided Electricity in Economic Development: The Experience of the Tennessee Valley Authority, 1929–1955," The Journal of Economic History, Cambridge University Press, vol. 74(2), pages 389-419, June.
    7. Steven Shavell, 2010. "Eminent Domain versus Government Purchase of Land Given Imperfect Information about Owners' Valuations," Journal of Law and Economics, University of Chicago Press, vol. 53(1), pages 1-27, February.
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    Cited by:

    1. Fleck, Robert K. & Hanssen, F. Andrew, 2024. "Courts, legislatures, and evolving property rules: Lessons from eminent domain," Explorations in Economic History, Elsevier, vol. 93(C).
    2. Kanazawa, Mark, 2023. "Politics and eminent domain: Evidence from the 1879 California constitution," Explorations in Economic History, Elsevier, vol. 90(C).
    3. Kitchens, Carl & Roomets, Alex, 2015. "Dealing with eminent domain," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 22-31.
    4. Portillo, Javier E., 2019. "Land-assembly and externalities: How do positive post-development externalities affect land aggregation outcomes?," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 104-124.
    5. Eric Cardella & Carl Kitchens, 2017. "The impact of award uncertainty on settlement negotiations," Experimental Economics, Springer;Economic Science Association, vol. 20(2), pages 333-367, June.
    6. Isaac, R. Mark & Kitchens, Carl & Portillo, Javier E., 2016. "Can buyer “mobility” reduce aggregation failures in land-assembly?," Journal of Urban Economics, Elsevier, vol. 95(C), pages 16-30.

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