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Institutional Imperfections and Buyer-Induced Holdout in Land Acquisition

Author

Listed:
  • Sreeparna Saha
  • Prabal Roy Chowdhury
  • Jaideep Roy
  • Grazyna Wiejak-Roy

Abstract

We look beyond the well-studied issues of fair compensation, regulatory takings, and seller-induced holdout that arise in the government purchase of land for economic development. We argue that political rivalry distorts land acquisition negotiations between private sellers and a private buyer driven by profits. We determine these distortions endogenously and characterise conditions when the buyer's optimal design to acquire land generates holdout. We analyse how bureaucratic corruption that increases transaction costs affects the degree and direction of political distortions and the incidence of holdout. We find that the size of corruption has nuanced nonmonotonic influences on holdout, seller welfare, and buyer's profits.

Suggested Citation

  • Sreeparna Saha & Prabal Roy Chowdhury & Jaideep Roy & Grazyna Wiejak-Roy, 2021. "Institutional Imperfections and Buyer-Induced Holdout in Land Acquisition," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 177(3), pages 261-298.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2021-0012
    DOI: 10.1628/jite-2021-0012
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    More about this item

    Keywords

    land acquisition for private profits; political rivalry; institutional imperfections; buyer-induced holdout;
    All these keywords.

    JEL classification:

    • D - Microeconomics
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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