Optimal compulsion for private assembly of property

Zakharenko, R. (2021) Optimal compulsion for private assembly of property. Regional Science and Urban Economics, 88, 103574. (doi: 10.1016/j.regsciurbeco.2020.103574)

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Multiple units of property, each owned by a seller with a private value, are perfect complements in a private redevelopment project. The paper develops a mechanism for assembly of property which (i) allows compulsory sales, (ii) does not require any transactions unless the property assembly takes place, (iii) is ex-post budget-balanced, (iv) guarantees a minimum compensation to each seller, and (v) seeks to maximize the joint welfare of sellers. The mechanism is shown to converge asymptotically, as the number of sellers grows, to the seller first-best at a high rate. The mechanism requires very little knowledge about the distributions of seller valuations, and is robust to incorrect specification of distributions of both seller or buyer valuations by the market maker.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Zakharenko, Dr Roman
Authors: Zakharenko, R.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Regional Science and Urban Economics
ISSN (Online):1879-2308
Published Online:05 August 2020

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