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Does economic endogeneity of site facilities in recreation demand models lead to statistical endogeneity?

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  • Chen, Min
  • Lupi, Frank

Abstract

Different kinds of endogeneity problems in Random Utility Models of recreation demand have been studied in previous literature. Some site characteristics, like facilities, could be endogenous in an economic sense due to the interplay of supply and demand. That is, it may be that more popular recreation sites tend to have better site characteristics since managers with limited budgets would be more willing to invest in them. If recreation site improvements are more likely to occur at the more popular sites, then might this economic endogeneity cause problems for econometric models linking site demand to facilities. In this paper, we use Monte Carlo simulations to test whether this economic endogeneity will lead to statistical endogeneity.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49449.

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Date of creation: 2009
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Handle: RePEc:ags:aaea09:49449

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Keywords: Random Utility Models; Facilities; Endogeneity; Monte Carlo simulations; Environmental Economics and Policy;

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  1. Peter P. Caulkins & Richard C. Bishop & Nicolaas W. Bouwes, 1985. "Omitted Cross-Price Variable Biases in the Linear Travel Cost Model: Correcting Common Misperceptions," Land Economics, University of Wisconsin Press, vol. 62(2), pages 182-187.
  2. Hicks, Robert L. & Schnier, Kurt E., 2006. "AJAE Appendix: Dynamic Random Utility Modeling: A Monte Carlo Analysis," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 88(4), November.
  3. Timmins, Christopher & Murdock, Jennifer, 2007. "A revealed preference approach to the measurement of congestion in travel cost models," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 230-249, March.
  4. Murdock, Jennifer, 2006. "Handling unobserved site characteristics in random utility models of recreation demand," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 1-25, January.
  5. McConnell, K. E. & Duff, Virginia A., 1976. "Estimating net benefits of recreation under conditions of excess demand," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 224-230, February.
  6. Lew, Daniel K. & Larson, Douglas M., 2005. "Accounting for stochastic shadow values of time in discrete-choice recreation demand models," Journal of Environmental Economics and Management, Elsevier, vol. 50(2), pages 341-361, September.
  7. Timothy C. Haab & Robert L. Hicks, . "Accounting for Choice Set Endogeneity in Random Utility Models of Recreation Demand," Working Papers 9710, East Carolina University, Department of Economics.
  8. Wetzel, James N., 1977. "Estimating the benefits of recreation under conditions of congestion," Journal of Environmental Economics and Management, Elsevier, vol. 4(3), pages 239-246, September.
  9. W. Bowman Cutter & Linwood Pendleton & J. R. DeShazo, 2007. "Activities in Models of Recreational Demand," Land Economics, University of Wisconsin Press, vol. 83(3), pages 370-381.
  10. P. Geoffrey Allen & Thomas H. Stevens & Scott A. Barrett, 1981. "The Effects of Variable Omission in the Travel Cost Technique," Land Economics, University of Wisconsin Press, vol. 57(2), pages 173-180.
  11. Roger H. von Haefen & D. Matthew Massey & Wiktor L. Adamowicz, 2005. "Serial Nonparticipation in Repeated Discrete Choice Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1061-1076.
  12. Roger Haefen, 2008. "Latent Consideration Sets and Continuous Demand Systems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(3), pages 363-379, November.
  13. von Haefen, Roger H. & Phaneuf, Daniel J., 2008. "Identifying demand parameters in the presence of unobservables: A combined revealed and stated preference approach," Journal of Environmental Economics and Management, Elsevier, vol. 56(1), pages 19-32, July.
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