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The Necessity for Substitute Prices Recreation Demand Analyses
Author(s) -
Rosenthal Donald H.
Publication year - 1987
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242194
Subject(s) - recreation , economic surplus , variance (accounting) , economics , econometrics , set (abstract data type) , consumer demand , base (topology) , microeconomics , computer science , mathematics , accounting , welfare , market economy , programming language , mathematical analysis , political science , law
Omitting substitute prices from a travel cost model is shown to cause a significant bias in consumer surplus estimates. Three sets of travel cost models are developed from a common data base representing 60,000 day‐users of U.S. Army Corps of Engineer reservoirs in Kansas and Missouri. The firct set of models omitted substitute prices; the latter two sets included them. An analysis of variance test showed that consumer surplus estimates from the first set of models were significantly higher than the other two ( F = 26.2 with 2, 20 degrees of freedom). The theoretical and practical implications of these findings are discussed.