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« Felonies and Misdemeanors | Main | Importing Price Ceilings »


Brian Yamabe

From a quick check on the Barron vs. Baltimore (1833) ruling (I'm not legal scholar), it makes sense that it could have been used. But, this would have kicked the legs out of many modern Supreme Court decisions, most notably Roe v. Wade. The extension of the Bill of Rights to restrain State governments as well as the Federal government is pretty much doctrine today.

Dave Tufte

You're right. My colleagues opinion was that he would have sided with the majority, but on the basis of it not being a Federal jurisdiction.

Patrick R. Sullivan

I'm not sure how the reasoning of Barron v Baltimore would apply. As Brian says, its 5th Amendment ruling has been overturned by the so called 'incorporation' of the 14th Amendment (O'Connor even mentioned it in her dissent).

Even though the congress that passed the 14th Amendment specifically refused to include the 'takings' clause in its language. Opting only for the 'due process' language.

Barron wasn't a taking anyhow. It was a tort claim. There was no reason for John Marshall to even entertain the 'taking' argument.

Dave Tufte

I will defer to better judgement from all commenters here, since MEGO when talking business law.

I do think though that the point about whether it was a taking or a tort depends on whether Barron's ownership extended into the water.


What a thought provoking post. I'm not familiar with the details, but if the court ruled that the compensation paid to the property owners should be equal to the cost of redevelopment (the strike price of the real option held by the property holders) that could have some unintended consequences. First, developers would only be interested in taking over blighted areas where the cost of development is less than the value of the option, which I would guess is the exception, not the rule. Second, all developers would in some sense jointly hold a call option on all properties that has a strike price of twice the cost of redevelopment. If that option is in the money, then all developers will be willing to exercise it, and presumably politicians would have to decide which developer wins. At least that's my take on it.

I don't mean to nit-pick, but the particular GOOGLE LEAP that you mentioned doesn't seem to make a good example. If the LEAP was selling at $250 and had a strike price of $50 and the stock was above $300, you could buy the LEAP, exercise immediately and pay $50, and then turn around and sell the stock for a pure arbitrage profit, not accounting for commissions. Maybe the quotes were off.

Dave Tufte

1) The first paragraph is fine, it's just that usually economists (like me) assume that all opportunities to make money will be taken driving the prices to equality. If you want to assume that people won't do that because there are other frictions, then that is fine.

2) I rounded everything for the LEAP example - I didn't want the casual reader who doesn't understand options to get lost in the minutae.

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