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Institutional imperfections and buyer-induced holdout in land acquisition

journal contribution
posted on 2022-09-30, 04:09 authored by S Saha, Jaideep Roy, P R Chowdhury, G Wiejak-Roy
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.

History

Journal

Journal of Institutional and Theoretical Economics

Volume

177

Issue

3

Pagination

261 - 298

ISSN

0932-4569

eISSN

1614-0559

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