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Institutional imperfections and buyer-induced holdout in land acquisition

Saha, Sreeparna; Chowdhury, Prabal Roy; Roy, Jaideep; Wiejak-Roy, Grazyna

Authors

Sreeparna Saha

Prabal Roy Chowdhury

Jaideep Roy



Abstract

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.

Journal Article Type Article
Acceptance Date Sep 16, 2021
Online Publication Date Jul 26, 2021
Publication Date Jul 26, 2021
Deposit Date Apr 4, 2022
Journal Journal of Institutional and Theoretical Economics
Print ISSN 0932-4569
Electronic ISSN 1614-0559
Publisher Mohr Siebeck
Peer Reviewed Peer Reviewed
Volume 177
Issue 3
Pages 261-298
DOI https://doi.org/10.1628/jite-2021-0012
Keywords Economics and Econometrics
Public URL https://uwe-repository.worktribe.com/output/9210260
Related Public URLs https://researchportal.bath.ac.uk/en/publications/institutional-imperfections-and-buyer-induced-holdout-in-land-acq