More on the Anti-Commons
From Eli Dourado.
If we could be certain that eminent domain would only used when it was efficiency-enhancing, and that adequate compensation would be made to the expropriated, I would have no problem with it. I would regard it as just another limitation on property rights, like the freedom to roam in Nordic countries, that makes us all better off. But as I think most libertarians would agree, the real problem is public choice; due to corruption or incompetence or both, governments may often resort to eminent domain as a favor to special interests even when it is not efficiency-enhancing, and it may fail to adequately compensate the expropriated, reducing the incentive to own and invest in property. Consequently, I join other libertarians in favoring strong limits on eminent domain.
He points out that the distinction between public use and private use may not be as significant as one might think. That is, if there is an anti-commons problem (or “holdout” problem) for a private good, that can be just as damaging as it is for a public good.
It’s only in a second-best sense, with the realization that the government must be constrained, that we should endorse the public use clause.