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The Cost of Kelo

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  • Thomas J. Miceli

Abstract

This article examines the economic implications of the definition of public use advanced by the Supreme Court in the case of Kelo v. City of New London . In its ruling, the Court asserted that the Fifth Amendment public use requirement is satisfied if the taking in question, even if for private ends, promises enhanced jobs and tax revenues for the community. This article first reviews the law and economics of public use and then argues that the Court’s justification creates the potential for an alliance between local governments and developers that will increase the risk of overuse of eminent domain. Underlying this risk is the unobservability of landowners’ subjective values, which requires local governments to rely on market value as the basis for property taxation.

Suggested Citation

  • Thomas J. Miceli, 2016. "The Cost of Kelo," Public Finance Review, , vol. 44(4), pages 500-522, July.
    • Handle: RePEc:sae:pubfin:v:44:y:2016:i:4:p:500-522
    DOI: 10.1177/1091142115595914
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    References listed on IDEAS

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    1. Steven P. Lanza & Thomas J. Miceli & C. F. Sirmans & Moussa Diop, 2013. "The Use of Eminent Domain for Economic Development in the Era of Kelo," Economic Development Quarterly, , vol. 27(4), pages 352-362, November.
    2. 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.
    3. Thomas J. Miceli & Kathleen Segerson, 2012. "Land Assembly and the Holdout Problem Under Sequential Bargaining," American Law and Economics Review, American Law and Economics Association, vol. 14(2), pages 372-390.
    4. Elaine B. Sharp & Donald Haider-Markel, 2008. "At the Invitation of the Court: Eminent Domain Reform in State Legislatures in the Wake of the Kelo Decision," Publius: The Journal of Federalism, CSF Associates Inc., vol. 38(3), pages 556-575, Summer.
    5. Lawrence Blume & Daniel L. Rubinfeld & Perry Shapiro, 1984. "The Taking of Land: When Should Compensation Be Paid?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(1), pages 71-92.
    6. 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.
    7. Lopez Edward J. & Jewell R. Todd & Campbell Noel D., 2009. "Pass a Law, Any Law, Fast! State Legislative Responses to the Kelo Backlash," Review of Law & Economics, De Gruyter, vol. 5(1), pages 101-135, April.
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