The Economics of Eminent Domain


by Timothy Sandefur

Here's an interesting look at the economic issues surrounding eminent domain abuse. It's a response to an argument by economist Patricia Munch, who contends that eminent domain is an effective way to eliminate so-called "holdouts" who stand in the way of development. This is a very common argument in the eminent domain debate. But as Thomas Garrett and Paul Rothstein point out,

her analysis fails to address several economic issues involving eminent domain that have broader implications for economic development and growth. Specifically, any economic analysis of eminent domain as it relates to the Kelo decision must recognize the tradeoffs inherent in giving local governments this kind of power over local economic development. Those who approve of eminent domain as it was used in Kelo fail to recognize the difference between what economists call "private goods" and "public goods." They also fail to see the inefficiencies often generated from government intervention in private markets.

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Thanks to David Boaz for the pointer.