Institutional Imperfections and Buyer-Induced Holdout in Land Acquisition

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 drive...

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Bibliographic Details
Published in:Journal of institutional and theoretical economics 2021-01, Vol.177 (3), p.261-298
Main Authors: Saha, Sreeparna, Chowdhury, Prabal Roy, Roy, Jaideep, Wiejak-Roy, Grazyna
Format: Article
Language:English
Subjects:
Agriculture
Bureaucracy
Buyers
Case studies
Civil society
Compensation
Corruption
Developing countries
Economic development
Eminent domain
Government
Interest groups
Land
Land purchases
Land surveys
Landowners
LDCs
Political economy
Political parties
Profits
Property rights
Purchasing
Transaction costs
Welfare
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Summary: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.
ISSN:0932-4569
1614-0559
DOI:10.1628/jite-2021-0012