Squatting, eviction and development

This paper explains both squatting and preemptive eviction by landowners within the context of incomplete land markets. The model shows that squatting is not inevitable in incomplete property markets; instead, it arises from optimal landowner decisions not to fully exercise property rights. The analysis explains why squatters' housing investments and owners' preemptive eviction rates tend to be higher than efficient and why eviction rates for open property are inefficiently high. It also examines informal land markets comprising potential squatters and owners and shows why they need not fully resolve inefficient squatter investment and landowner eviction decisions.