The Economics of Eminent Domain: Private Property, Public Use, and Just Compensation

The eminent domain clause of the U.S. Constitution concerns the limits of the government's right to take private property for public use. The economic literature on this issue has examined (1) the proper scope of this power as embodied by the "public use" requirement, (2) the appropriate definition, and implications, of "just compensation," and (3) the impact of eminent domain on land use incentives of owners whose land is subject to a taking risk. This essay reviews this literature and draws implications for our understanding of eminent domain law.