The holdout problem and urban sprawl: Experimental evidence

Cadigan, John; Schmitt, Pamela; Shupp, Robert; Swope, Kurtis

doi:10.1016/j.jue.2010.08.006

Cited by 29 publications

(15 citation statements)

References 41 publications

(54 reference statements)

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“…Furthermore, transactions costs and strategic bargaining costs are both likely to increase with the degree of land fragmentation. The land-assembly problem has been linked to inefficient land use and urban sprawl both theoretically (Miceli and Sirmans 2007) and experimentally (Cadigan et al 2009b).…”

Section: Introductionmentioning

confidence: 99%

“…It is important to investigate whether bargaining behavior is consistent with the theoretical literature on the holdout and holdup problems. Cadigan et al (2009aCadigan et al ( , 2009b use multilateral bargaining experiments to investigate the holdout problem, where holdout is measured as bargaining delay. Cadigan et al (2009a) vary the type of institution (buyer offer versus seller demand), number of bargaining periods (one versus ten periods), and examine both costly and costless delay.…”

Section: Introductionmentioning

confidence: 99%

“…Delay costs reduce holdout, but also result in efficiency losses. Cadigan et al (2009b) vary the number of sellers and level of competition among sellers. They find that the buyer's final earnings vary inversely with the number of sellers, ceteris paribus, indicating an incentive to purchase consolidated land.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Contracts, Behavior, and the Land-assembly Problem: An Experimental Study

Swope¹,

Wielgus²,

Schmitt³

et al. 2011

Experiments on Energy, the Environment, and Sustainability

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We use multilateral bargaining experiments to examine how the order of bargaining (simultaneous or sequential) and the nature of contracts (contingent or non-contingent) affect the duration of bargaining, the efficiency of exchange, and the distribution of the surplus in a laboratory land-assembly game with one buyer and two sellers. While theory predicts an earnings advantage for the first seller when contracts are sequential and contingent, and for the second seller when contracts are sequential and non-contingent, we find that when a seller has an earnings advantage in the laboratory, it is the first seller to bargain in the non-contingent contract treatments. This result contradicts conventional wisdom and a common result from the land-assembly literature that it is advantageous to be the last seller to bargain, a so-called "holdout". We also find evidence that sequential bargaining leads to more aggressive seller bargaining and greater bargaining delay than simultaneous bargaining, ceteris paribus, and that non-contingent contracts increase bargaining delay and the likelihood of failed agreements. The majority of sellers indicated a preference for being the first seller to bargain in all sequential bargaining treatments.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Contracts, Behavior, and the Land-assembly Problem: An Experimental Study

Swope¹,

Wielgus²,

Schmitt³

et al. 2011

Experiments on Energy, the Environment, and Sustainability

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show abstract

“…Moreover, problems of land assembly may cause cities 1 Other theoretical work on land assembly includes Asami (1988); Eckart (1985); Grossman, Pincus, and Shapiro (2010); and Menezes and Pitchford (2004). Cadigan et al (2011) conduct experimental research on the potential private market inefficiencies in land assembly. Kominers and Weyl (2010), Plassman and Tideman (2008), and Tanaka (2007) suggest mechanisms for solving the holdout problem.…”

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confidence: 99%

From Today's City to Tomorrow's City: An Empirical Investigation of Urban Land Assembly

Brooks

Lutz

2016

American Economic Journal: Economic Policy

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C ities are composed of individual pieces of land called parcels. Just as atoms dictate the properties of matter, parcels dictate the size, shape, and placement of the built infrastructure of which cities are composed. Changes in technology and economic conditions cannot induce fundamental changes to this built infrastructure without changes to parcel boundaries. Thus, the long-run evolution of cities-and the economic growth and innovation they generate-depends upon the ease of modifying parcel boundaries.

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“…Are they restricted to voluntary negotiation, the use of dummy corporations, or the use of contingent contracts as suggested recently by the experimental literature? (Collins & Isaac, 2012;Swope et al, 2011). Or, are there even more tools available that could be adopted by both public and private developers alike to deal with the issue?…”

Section: Resultsmentioning

confidence: 99%

The impact of bargaining delays under the threat of eminent domain

Portillo

2017

Journal of Regional Science

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Developers seeking to assemble complementary parcels of land will likely encounter strategic behavior by landowners. Using a property‐level data set from Florida's Department of Transportation covering the period January 2000 to July 2014, I test whether bargaining delays lead to higher final transaction prices. Given the nature of the data, I can compare properties within the same roadway project to estimate the effect of delayed negotiations. My empirical estimates indicate that bargaining delays lead to increased final transaction prices. The magnitude of this effect is approximately 7 percent for the average holdout, however, the effect is nonlinear and diminishes over time.

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The holdout problem and urban sprawl: Experimental evidence

Cited by 29 publications

References 41 publications

Contracts, Behavior, and the Land-assembly Problem: An Experimental Study

Contracts, Behavior, and the Land-assembly Problem: An Experimental Study

From Today's City to Tomorrow's City: An Empirical Investigation of Urban Land Assembly

The impact of bargaining delays under the threat of eminent domain

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