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Acquiring Land Through Eminent Domain: Justifications, Limitations, And Alternatives, Daniel Kelly

Daniel B Kelly

The primary functional justifications for eminent domain involve bargaining problems, including the holdout problem, the bilateral monopoly problem and other transaction costs, as well as the existence of externalities. The holdout problem is particularly noteworthy, and this chapter analyzes three types of holdouts, depending on whether the failure in bargaining is the result of strategic behavior among owners, the presence of a large number of owners or a single owner who is unwilling to sell because of a highly idiosyncratic valuation. Although eminent domain solves any potential bargaining problems by transferring land directly from existing owners to the government, eminent …