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Land assembly with taxes, not takings

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  • Mark DeSantis
  • Matthew W. McCarter
  • Abel M. Winn

Abstract

We use a novel tax mechanism – ‘rejected offer reassessment’ (ROR) – in laboratory experiments to discourage seller holdout and facilitate land assembly. Under this mechanism, if a landowner rejects a developer’s offer, his taxable property value is reassessed to be equal to the rejected offer, increasing his taxes. We find that, relative to a control treatment, ROR discourages the magnitude of seller holdout (but not its frequency) and increases the rate of successful land assembly by almost 60%. It also increases the gains from trade by 22.1% relative to the control treatment, but the difference is not statistically significant.

Suggested Citation

  • Mark DeSantis & Matthew W. McCarter & Abel M. Winn, 2019. "Land assembly with taxes, not takings," Applied Economics Letters, Taylor & Francis Journals, vol. 26(7), pages 604-607, April.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:7:p:604-607
    DOI: 10.1080/13504851.2018.1488047
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    Cited by:

    1. Zillante, Artie & Read, Dustin C. & Seiler, Michael J., 2020. "Assembling land for urban revitalization in the presence of linchpin parcels and information asymmetries: An experimental investigation," Land Use Policy, Elsevier, vol. 99(C).
    2. Vincent Mak & Rami Zwick, 2024. "Fairness and Transparency in One-to-Many Bargaining with Complementarity: An Experimental Study," Games, MDPI, vol. 15(4), pages 1-29, June.
    3. 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.

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