AT WHAT MAGNITUDE is the compensation paid for a taking of private property “just”? Compensation for involuntary exchange is just when it is equivalent to the compensation that could be derived from voluntary exchange. Another way of stating the proposition is that the property owner is treated justly when he is made to be indifferent between voluntarily selling his asset in the market and submitting to the state's power of eminent domain to condemn his asset for public use.

A defense raised against claims for compensation for deregulatory takings is that the government has already provided implicit compensation—what might be termed deregulatory “givings”—in return for the takings associated with the changing regulatory regime. Such givings may take several forms, including price deregulation, changes in regulatory obligations, relaxation of incumbent burdens, or lifting of regulatory quarantines. Givings are essentially compensation “in kind.” The value of such in-kind transfers and the conditions placed on them determine whether a giving constitutes just compensation for the taking in question. The takings situation differs from the usual rule in contract law, under which a court ordinarily will not review the sufficiency of the consideration in the contract. In the contractual setting, the sufficiency of the consideration flows directly from the fact that a contract rests on voluntary exchange. At the time of the contract's formation, each party held expectations that the contract would make him better off; otherwise, no consensual transaction would have occurred. In contrast, a taking of property by the government exemplifies involuntary exchange.