The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Taking (Eminent Domain)

  • Perry Shapiro
Reference work entry


Compensation for a public taking of private property (typically land) can affect both government’s and landowners’ decisions, and compensation rules affect both real and perceived fairness. Arguably, no compensation is efficient; landowners will account for probable loss when making their investment decisions, since such decisions are determined by events outside the discretion of either the landowners or the government (though if the taking decision is made to benefit government or landowners, zero compensation may be inefficient). But zero compensation is unconstitutional (in the United States and Australia) and inequitable. A trade-off between efficiency and equity is therefore normally unavoidable.


Compensation calculus Efficiency–equity trade-off Epstein, R Fairness Just compensation Land use Public property Rent seeking Taking Fifth Amendment (US Constitution) 

JEL Classification

H0 K0 K19 H41 D63 D72 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Perry Shapiro
    • 1
  1. 1.