Under what circumstances is it cheaper for private developers to obtain formerly private property through the government’s use of eminent domain?

As noted in this chapter, private ownership of land is always limited by the government’s power to take private property for public use through eminent domain. The U.S. Constitution allows private property to be condemned so that it can used for public benefit. You may have already learned in an economics course that when an exchange is voluntary, both parties by definition are better off—otherwise, they would not engage in the exchange. In contrast, an involuntary exchange occurs when, for example, a robber puts a gun to your head and says, “Your wallet or your life.” Voluntary exchange is the basis of all market economic systems. Indeed, some economists argue that the only way a nation can experience economic growth is through voluntary exchange, because both parties to such exchanges always benefit.