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Decomposing the structural identification of non-market values

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  • Kuminoff, Nicolai V.

Abstract

This paper addresses the issue of transparency in structural modeling by investigating how the assumptions of a structural model contribute to its identification of non-market values. Assumptions about the form of the utility function, the depiction of preference heterogeneity, and the definition for the choice set are shown to jointly identify a partition of preference space which explains observed behavior. The borders of the partition reflect substitution patterns. The regions in the partition set-identify preferences. Assumptions about the distribution of preferences within each region point-identify partial equilibrium welfare measures. Together, these observations provide a framework for decomposing the structural identification of non-market values. The new framework allows analysts to explain how their modeling assumptions influence estimates for benefits and costs. This addresses federal guidelines for quantifying uncertainty in the modeling assumptions which enter benefit-cost analysis. The framework is demonstrated by decomposing estimates of the MWTP for air quality.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 57 (2009)
Issue (Month): 2 (March)
Pages: 123-139

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Handle: RePEc:eee:jeeman:v:57:y:2009:i:2:p:123-139

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Web page: http://www.elsevier.com/locate/inca/622870

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Keywords: Equilibrium sorting Locational equilibrium Partition Hedonic Random utility Willingness-to-pay Preferences;

References

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Cited by:
  1. Abildtrup, Jens & Garcia, Serge & Olsen, Søren Bøye & Stenger, Anne, 2013. "Spatial preference heterogeneity in forest recreation," Ecological Economics, Elsevier, Elsevier, vol. 92(C), pages 67-77.
  2. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2013. "The New Economics of Equilibrium Sorting and Policy Evaluation Using Housing Markets," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 51(4), pages 1007-62, December.
  3. Fan, Qin & Klaiber, H. Allen & Fisher-Vanden, Karen, 2012. "Climate Change Impacts on U.S. Migration and Household Location Choice," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington, Agricultural and Applied Economics Association 124588, Agricultural and Applied Economics Association.
  4. Elena G. Irwin, 2010. "New Directions For Urban Economic Models Of Land Use Change: Incorporating Spatial Dynamics And Heterogeneity," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 50(1), pages 65-91.
  5. H. Allen Klaiber & V. Kerry Smith, 2010. "Valuing Incremental Highway Capacity in a Network," NBER Working Papers 15989, National Bureau of Economic Research, Inc.
  6. Marc Baudry & Masha Maslianskaia-Pautrel, 2012. "Revisiting the hedonic price method to assess the implicit price of environmental quality with market segmentation," EconomiX Working Papers, University of Paris West - Nanterre la Défense, EconomiX 2012-45, University of Paris West - Nanterre la Défense, EconomiX.
  7. Mikołaj Czajkowski & Anna Bartczak & Marek Giergiczny & Stale Navrud & Tomasz Żylicz, 2013. "Providing Preference-Based Support for Forest Ecosystem Service Management in Poland," Working Papers, Faculty of Economic Sciences, University of Warsaw 2013-05, Faculty of Economic Sciences, University of Warsaw.

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