Handout for Econ 522, Fall 2009, Disc #4, 10/2
1. Compensatory Damages
Temporary – compensate for harms that have already occurred
Permanent – also cover present value of anticipated future harm
-cost of measuring damage VS innovation;
-error cost VS administration cost
-unboundling right of permanent damage
e.g. Once upon a time, there were no cables for TV. Mr. Bean’s TV antenna stopped working
from time to time. It turned out it was his neighbor Mr. Porter’s magic that intervened with the
TV signals. And it seems Mr. Porter needed to continue to use his magic to save the world.
(1) Injunction or Damage?
(2) Temporary damages or Permanet?
(3) Suppose Permanet D has been awarded, will Mr. Port have incentive for reducing future
damage? And if the permanet damage is awared to Mr Bean, and Mr. Corn bought the house
and also found that the TV antenna did not work from time to time. Should Mr. Porter
compensate Mr. Corn as well?
2. Government Taking/ Eminent Domain
Eminent domain (United States), compulsory purchase (United Kingdom, New Zealand,
Ireland), resumption/compulsory acquisition (Australia) or expropriation (South Africa and
Canada's common law systems) is the inherent power of the state to seize a citizen's private
property, expropriate property, or seize a citizen's rights in property with due monetary
compensation, but without the owner's consent. The property is taken either for government use
or by delegation to third parties who will devote it to public or civic use or, in some cases,
economic development. The most common uses of property taken by eminent domain are for
public utilities, highways, and railroads. Some jurisdictions require that the government body offer
to purchase the property before resorting to the use of eminent domain.
At the time the United States was created, it and the several states continued to use the British
common law, including the principle of eminent domain. The term "eminent domain" was taken
from the mid-19th century from the legal treatise, De Jure Belli et Pacis, written by the Dutch
jurist Hugo Grotius in 1625, who used the term dominium eminens (Latin for supreme lordship)
(0) why eminent domain
(1) effects on transaction cost
(2) why just compensation
3. Regulatory Taking
If regulation goes too far it will be recognized as a taking (a regulation devalue the property so
much that it’s as if the government simply take the property) –but not actual taking
e.g. the congress expropriate all private cellphones; or the congress says that one cannot use one’s
cellphone to make a phone call (stupid VS smart phones)
e.g. the city government baned installation of solar panels, because it’s ugly