Land Acquisition: Fragmentation, Political Intervention and Holdout

Roy Chowdhury, Prabal (2009): Land Acquisition: Fragmentation, Political Intervention and Holdout.

Abstract

This paper provides a theory of holdout based on the landowners' inability to manage large sums of money and consequent lack of consumption smoothing in case of sale. We find that under some reasonable conditions fragmentation increases holdout and moreover, this happens if and only if large landowners are relatively more willing to sale. Turning to the effects of politicization, we find that voice coupled with collective bargaining increases efficiency provided fragmentation is severe. Further, whether there is political intervention or not depends on the political maturity of the landowners, i.e. if they already have voice or not.

• Item Type: MPRA Paper
• Language: English
• Keywords: Land acquisition; holdout; fragmentation; politics; voice; collective bargaining.
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships ; Contracts and Reputation ; Networks; D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory ; Matching Theory; D - Microeconomics > D6 - Welfare Economics > D62 - Externalities

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