Blume, Rubinfeld, and Shapiro (1984) first showed that compensation for takings can lead to a moral hazard problem that results in overinvestment in land suitable for public use. To the contrary, this paper shows that the compensation rule is irrelevant regarding the level of investment...

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...

This paper examines markets, firms, and the law as alternative institutional arrangements for organizing transactions that involve transaction-specific investments and uncertain performance. The analysis is the logical extension of Coase's seminal examination of the market-firm boundary on one...

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 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...

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...

This essay examines the historiography of two episodes in history – the scattering of plots in the open fields in the Middle Ages and the transition to the factory system in the Industrial Revolution – to shed light on the uses of institutional economics in economic history. In both of these...

A handful of economically distressed cities and counties are considering using their power of eminent domain to write down the principal of underwater mortgage loans. Analogous to the condemnation of tangible real estate for public use, the city would “take” intangible mortgage loans from...

This review essay discusses and appraises Douglas Allen’s The Institutional Revolution (2011) as a way of reflecting on the uses of the New Institutional Economics (NIE) in economic history. It praises and defends Allen’s method of asking “what economic problem were these institutions...

A model is developed explaining many common historical sequences: inter alia, the rise and fall of empires, expansion or contraction in the geographic size of nations, wars of secession, non-contested secessions, and growth of supra-national unions. The basic unit of analysis is a transaction in...