A developer wants to build a shopping mall on land that is made up of many privately owned parcels. Without getting everyone to agree to sell, the land is worthless to the developer. A transaction cost the developer faces when attempting to buy these parcels is O threat values of homeowners will decrease in value as the surrounding land is raised for the mall. after buying up a portion of the parcels, remaining owners can hold out for more of the cooperative surplus than originally anticipated. O the fair market value of the land may be higher than the value to
A developer wants to build a shopping mall on land that is made up of many privately owned parcels. Without getting everyone to agree to sell, the land is worthless to the developer. A transaction cost the developer faces when attempting to buy these parcels is O threat values of homeowners will decrease in value as the surrounding land is raised for the mall. after buying up a portion of the parcels, remaining owners can hold out for more of the cooperative surplus than originally anticipated. O the fair market value of the land may be higher than the value to
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A developer wants to build a shopping mall on land that is made up of many privately owned
parcels. Without getting everyone to agree to sell, the land is worthless to the developer. A
transaction cost the developer faces when attempting to buy these parcels is
O threat values of homeowners will decrease in value as the surrounding land is raised for the mall.
O after buying up a portion of the parcels, remaining owners can hold out for more of the cooperative surplus
than originally anticipated.
the fair market value of the land may be higher than the value to existing homeowners.
O some owners may free ride off of the negotiations made by other sellers.
O land may be inalienable according to the 5th amendment of the US Constitution.
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