Land acquisition: Political intervention, voice and fragmentation

This paper develops a simple dynamic framework of holdout in land acquisition (both with and without political intervention), where holdout arises because of the landowners' inability to manage large sums of money (and consequent lack of inter-temporal consumption smoothing in case of sale). We then use this framework to analyze two issues, political intervention and fragmentation, showing that the results depend on a subtle interaction of voice, collective bargaining and the severity of fragmentation. Political intervention leads to a large party size (and is consequently more likely) in case it leads to voice for both members and non-members, but not otherwise. Moreover, under both these scenarios, politicization may lead to inefficiency. Further, the efficiency implications of fragmentation also depend on the nature of politicization, with fragmentation increasing holdout in the absence of politicization.