Abstract
We look beyond the well-studied issues of fair compensation, regulatory tak-ings, 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 di-rection 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.
Original language | English |
---|---|
Pages (from-to) | 261-298 |
Number of pages | 38 |
Journal | Journal of Institutional and Theoretical Economics |
Volume | 177 |
Issue number | 3 |
Early online date | 26 Jun 2021 |
DOIs | |
Publication status | Published - 26 Jul 2021 |
Bibliographical note
Publisher Copyright:© 2021 Mohr Siebeck.
Keywords
- Buyer-induced holdout
- Institutional im-perfections
- Land acquisition for private profits
- Political rivalry
ASJC Scopus subject areas
- Economics and Econometrics