International Journal of Game Theory

, Volume 46, Issue 3, pp 783–812 | Cite as

Mechanism design for land acquisition

  • Soumendu SarkarEmail author
Original Paper


We consider the issue of designing Bayesian incentive-compatible, efficient, individually rational and balanced mechanisms for Land Acquisition. This is a problem of great practical importance in developing countries. Several sellers, each with one unit of land, are located at the nodes of a graph. Two sellers are contiguous if they are connected by an edge in the graph. The buyer realizes a positive value only if he can purchase plots that constitute a path of given length. Our main result is that there is a robust set of priors for which successful mechanisms exist when there are at least two distinct feasible sets of contiguous sellers. The analysis also identifies the role of critical sellers who lie on all such feasible sets.


Contiguity Eminent domain Holdout Land acquisition Mechanism design Myerson–Satterthwaite impossibility 

JEL Classification

C78 D47 


  1. Bikhchandani S, de Vries S, Schummer J, Vohra RV (2002) Linear programming and vickrey auctions. Math Internet E-auction Markets 127:75–116CrossRefGoogle Scholar
  2. Cai H (2000) Delay in multilateral bargaining under complete information. J Econ Theory 93:260–276CrossRefGoogle Scholar
  3. Cai H (2003) Inefficient Markov perfect equilibria in multilateral bargaining. Econ Theory 22(3):583–606Google Scholar
  4. Chatterjee K, Samuelson W (1983) Bargaining under incomplete information. Oper Res 31:835–851CrossRefGoogle Scholar
  5. Clarke EH (1971) Multipart pricing of public goods. Public Choice 11:17–33CrossRefGoogle Scholar
  6. Cramton P, Gibbons R, Klemperer P (1987) Dissolving a partnership efficiently. Econometrica 55:615–632CrossRefGoogle Scholar
  7. Ghatak M, Ghosh P (2011) The land acquisition bill: a critique and a proposal. Econ Polit Wkly 46:65Google Scholar
  8. Ghatak M, Mitra S, Mookherjee D, Nath A (2013) Land acquisition and compensation: what really happened in Singur? Econ Polit Wkly 48(21):32–44Google Scholar
  9. Grossman Z, Pincus J, Shapiro P (2010) A second-best mechanism for land assembly, Working paperGoogle Scholar
  10. Groves T (1973) Incentives in teams. Econometrica 41:617–631CrossRefGoogle Scholar
  11. Jackson MO (2000) Mechanism theory. In: Derigs. U (ed) The encyclopedia of life support systems. EOLSS Publishers, Paris, FranceGoogle Scholar
  12. Kominers SD, Weyl EG (2011) Concordance among holdouts. In: Proceedings of the 12th ACM conference on electronic commerce, ACM, pp 219–220Google Scholar
  13. Kominers SD, Weyl EG (2012) Holdout in the assembly of complements: a problem for market design. Am Econ Rev 102:360–365CrossRefGoogle Scholar
  14. Krishna V (2002) Auction theory. Academic Press, New YorkGoogle Scholar
  15. Krishna V, Perry M (2000) Efficient mechanism design, Working PaperGoogle Scholar
  16. Lehmann D, Oćallaghan L, Shoham Y (2002) Truth revelation in approximately efficient combinatorial auctions. J ACM (JACM) 49:577–602CrossRefGoogle Scholar
  17. Makowski L, Mezzetti C (1993) The possibility of efficient mechanisms for trading an indivisible object. J Econ Theory 59:451–465CrossRefGoogle Scholar
  18. Makowski L, Mezzetti C (1994) Bayesian and weakly robust first best mechanisms: characterizations. J Econ Theory 64:500–519CrossRefGoogle Scholar
  19. McAfee RP (1991) Efficient allocation with continuous quantities. J Econ Theory 53:51–74CrossRefGoogle Scholar
  20. Menezes F, Pitchford R (2004) A model of seller holdout. Econ Theory 24(2):231–253Google Scholar
  21. Miceli TJ (2011) The economic theory of eminent domain: private property, public use. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  22. Myerson R, Satterthwaite M (1983) Efficient mechanisms for bilateral trading. J Econ Theory 29:265–281CrossRefGoogle Scholar
  23. Plassmann F, Tideman T (2010) Providing incentives for efficient land assembly, Tech. rep., working paperGoogle Scholar
  24. Roy Chowdhury P, Sengupta K (2012) Transparency, complementarity and holdout. Games Econ Behav 75:598–612CrossRefGoogle Scholar
  25. Royal Swedish Academy of Sciences (2007) Scientific bacground on mechanism design theory.
  26. Schweizer U (2006) Universal possibility and impossibility results. Games Econ Behav 57:73–85CrossRefGoogle Scholar
  27. Singh R (2012) Inefficiency and abuse of compulsory land acquisition: an enquiry into the way forward, CDE Working Paper No. 209Google Scholar
  28. Vickrey W (1961) Counterspeculation, auctions and competitive selaed tenders. J Financ 16:8–37CrossRefGoogle Scholar
  29. Wikipedia (2014a) Kelo v. City of New London—Wikipedia, The Free EncyclopediaGoogle Scholar
  30. Wikipedia (2014b) Singur Tata Nano controversy—Wikipedia, The Free EncyclopediaGoogle Scholar
  31. Williams SR (1999) A characterization of efficient, Bayesian incentive compatible mechanisms. Econ Theory 14:155–180CrossRefGoogle Scholar
  32. Xiao J (2010) Bargaining order in a multi-person bargaining game. Available at SSRN 1685463Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.TERI UniversityNew DelhiIndia

Personalised recommendations