Theoretical Framework and Empirical Analysis
The first part of this book makes several theoretical claims: first, condemnors’ incentives, condemnees’ incentives, assessment accuracy, and assessment costs should be taken into account when determining the most efficient form of takings compensation; second, the political interest theory explains government officials’ behaviors better than the fiscal illusion theory and the benevolent theory; third, condemnees will have incentives to invest efficiently under the economic value standard, the fair market value standard, and the project value standard, but only the economic value standard does not induce condemnees to carry out rent-seeking activities; and finally, no practical assessment method can produce accurate assessments of property value at low costs. The second part of this book empirically examines several related issues, finding that the political interest theory is indeed borne out by data from Taiwan. In addition, although no existing database enables us to measure the efficiency of condemnees’ investments, I find that condemnees do respond to incentives structured by the legal regimes in setting their selfassessed property value. Thus, it will not be surprising if condemnees manipulate their investments if they expect to be incompletely compensated in the eminent domain procedure. Finally, the four real-world assessment regimes examined all fail to award condemnees with accurately assessed property values.
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