Negotiating out of holdouts in land aggregation in India: small town lawyers, contingent contracts, social norms, and auctions

Abstract

This a paper about the role of lawyers in small towns in India as the intermediary agents of large corporations. They help resolve disputes among farmers with small land holdings and also negotiate with them to purchase and aggregate a valuable asset i.e., land, for these corporations to expand their operations to serve foreign markets or domestic markets that have grown since 1991. Without these small-town lawyers, infrastructure and multinational corporations would likely rely on the government to aggregate small parcels by exercising eminent domain with low “just” compensation, and then face political problems and higher long-run costs. In fact, it is safe to say that without these small-town lawyers, many corporations (including the likes of Infosys, Satyam, GMR, and GVK) would not have amassed and managed their land-banks which are the most valuable assets on their balance sheets. These small town lawyers leverage contingent contracts, and pressures of social norms, social exclusion, and coalition building in their aggregation efforts. There is evidence to show that they are able to offer integrative negotiation solutions to small landowners, thereby producing lesser resentment among them. They are also able to network with small town lawyers in rival locations of aggregation and create competitive auction markets to exert a downward pressure on reservation prices of small landowners.