This entry discusses the economics of eminent domain, which is the government’s power to take or regulate privately owned property for the common good. It discusses the origins of the power as well as its limits, particularly as embodied in the public use and just compensation requirements. It...

The holdup and holdout problems arise in different contexts, but they share certain fundamental similarities that have not generally been recognized. In particular, both involve activities requiring an up-front, non-salvageable investment, and both require the investor to purchase an input, the...

When consumers vary in their susceptibility to product-related harm, safety regulation dominates liability because when consumers bear their own damages they are induced to selfselect in their purchase decisions. When consumers also misperceive risk, however, liability may be preferred because...

Liability and regulation are equally good at controlling product-related risks when consumers suffer the same expected harm and perceive risks correctly. When they misperceive risks, however, liability is preferred because the product price accurately signals risk and therefore induces efficient...

This paper examines products liability when consumers have private information about their susceptibilities to product-related harm. In this case, it is efficient for consumers to self-select in their purchases, with those especially prone to harm refraining from purchase. Achieving this outcome...

A regulatory taking occurs when a government regulation reduces the value of private property to such a degree that the owner is entitled to compensation under the Fifth Amendment Takings Clause. This chapter reviews legal and economic theories aimed at determining when a regulation crosses the...

The economic models that prescribe Pigovian taxation as the first-best means of reducing energy-related externalities and argue that taxes are superior to energy efficiency standards are typically based on the neoclassical model of rational consumer choice. Yet, observed consumer behavior with...

The paper investigates alternative policies to regulate emissions from polluting product markets, specifically considering the case of the automobiles market. The two policies we consider are: a quota that limits the quantity produced of the polluting model and a more flexible average efficiency...

Tax motivated takings are takings by a local government aimed purely at increasing its tax base. Such an action was justified by the Supreme Court's ruling in Kelo v. New London, which allowed the use of eminent domain for a private redevelopment project on the grounds that the project promised...

This paper clarifies the relationship between an injurer's wealth level and his care choice by highlighting the distinction between monetary and non-monetary care. When care is non-monetary, wealth-constrained injurers generally take less than optimal care, and care is increasing in their wealth...