Book contents
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
7 - Just Compensation for Deregulatory Takings
Published online by Cambridge University Press: 29 October 2009
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
Summary
AT WHAT MAGNITUDE is the compensation paid for a taking of private property “just”? Compensation for involuntary exchange is just when it is equivalent to the compensation that could be derived from voluntary exchange. Another way of stating the proposition is that the property owner is treated justly when he is made to be indifferent between voluntarily selling his asset in the market and submitting to the state's power of eminent domain to condemn his asset for public use.
A defense raised against claims for compensation for deregulatory takings is that the government has already provided implicit compensation—what might be termed deregulatory “givings”—in return for the takings associated with the changing regulatory regime. Such givings may take several forms, including price deregulation, changes in regulatory obligations, relaxation of incumbent burdens, or lifting of regulatory quarantines. Givings are essentially compensation “in kind.” The value of such in-kind transfers and the conditions placed on them determine whether a giving constitutes just compensation for the taking in question. The takings situation differs from the usual rule in contract law, under which a court ordinarily will not review the sufficiency of the consideration in the contract. In the contractual setting, the sufficiency of the consideration flows directly from the fact that a contract rests on voluntary exchange. At the time of the contract's formation, each party held expectations that the contract would make him better off; otherwise, no consensual transaction would have occurred. In contrast, a taking of property by the government exemplifies involuntary exchange.
- Type
- Chapter
- Information
- Deregulatory Takings and the Regulatory ContractThe Competitive Transformation of Network Industries in the United States, pp. 273 - 282Publisher: Cambridge University PressPrint publication year: 1997