Willingness-to-accept versus willingness-to-pay measures of value: implications for rent control, eminent domain, and zoning

The difference between an individual's willingness-to-accept (WA) measure of value and willingness-to-pay (WP) measure is utilized in relation to a group's WA measure of value to explain public policies on real estate and housing. The model is relatively simple and focuses on rent control, eminent domain and zoning policies. Results show that government welfare policies or programs which do not appear efficient on a WP measure standard may be efficient using a WA measure standard.
When making welfare judgments, economists usually invoke, sometimes almost unconsciously, a willingness-to-pay (WP) notion of efficiency. An allocation is efficient if it assigns entitlements to those willing to pay the [...]