Search

European Academy of Land Use and Development (EALD), ISBN:978-3-7281-3803-3, ISBN:978-3-7281-3804-0, ISBN:3-7281-3803-7

QC 20111111

QC 20111208

Publications of the European Faculty of Land Use and Development, ISBN:978-3-7281-3375-5, ISBN:978-3-7281-3338-0

Swedish law provides that compensation for compulsory purchase – in some cases – shall be decided according to the following general principle: The compensation should correspond to the price that could have been expected if it had been a "normal voluntary transaction". However, in those specific situations where compulsory purchase applies, there is always a lack of empirical data of price levels in voluntary agreements. In this article we enlighten the problem through bargaining experiments with buyers and sellers. We provide experimental evidence from Sweden indicating that the price level – or the profit-sharing between buyer and seller – depends on the context and what is judged to be reasonable principles of fair distribution.

Microeconomic theory can illuminate various problems pertaining to urban economics. This paper focuses on problems related to property formation, especially adjustment of property boundaries. The aim of the paper is to provide models for analysis and discussions concerning (1) the incentives for property owners to adjust the boundary between their properties, (2) the purpose of legislation governing the design of properties and, finally, (3) the reasons for compulsory purchase. In connection to the latter part the issue of a fair and reasonable compensation is discussed.