Public Use or Abuse? The Use of Eminent Domain for Economic Development in the Era of \textit{Kelo}

The Supreme Court decision in Kelo v. New London (2005) authorized the use of eminent domain for economic redevelopment projects provided that there are sufficient spillover benefits to the public in the form of enhanced taxes and new jobs. This paper examines the economic basis for this decision, and tests the conclusions using cross-state data on economic development takings. It also examines the factors underlying the political actions by states to limit such takings following the Kelo decision. The results are consistent with the economic justification for eminent domain as a means of overcoming holdout problems associated with land assembly.