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Two-Stage Estimation to Control for Unobservables in a Recreation Demand Model with Unvisited Sites

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  • Melstrom, Richard T.
  • Jayasekera, Deshamithra H.W.

Abstract

The role of unobserved site attributes is a growing concern in recreation demand modeling. One solution in random utility models (RUM) involves separating estimation into two stages, where the RUM model is estimated with alternative-specific constants (ASCs) in the first stage, and the estimated ASCs are regressed on the observed site attributes in the second stage. Prior work estimates the second stage with OLS and 2SLS regression. We present an application with censored regression in the second stage. We show OLS produces inconsistent parameters when there are unvisited sites with no estimable ASCs and that censored regression avoids this problem.

Suggested Citation

  • Melstrom, Richard T. & Jayasekera, Deshamithra H.W., 2016. "Two-Stage Estimation to Control for Unobservables in a Recreation Demand Model with Unvisited Sites," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236252, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:236252
    DOI: 10.22004/ag.econ.236252
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    1. Melstrom, Richard T., 2017. "The petroleum industry's response to an endangered species listing," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258281, Agricultural and Applied Economics Association.
    2. Merrill, Nathaniel & Mazzotta, Marisa J. & Mulvaney, Kate K. & Sawyer, Joshua Paul & Twichell, Julia & Atkinson, Sarina F. & Keith, Darryl & Erban, Laura, 2022. "The Value of Water Quality for Coastal Recreation in New England, USA," SocArXiv q2mg3, Center for Open Science.
    3. Melstrom, Richard T., 2017. "Where to drill? The petroleum industry's response to an endangered species listing," Energy Economics, Elsevier, vol. 66(C), pages 320-327.
    4. Melstrom, Richard & Reeling, Carson, 2023. "Using aggregate trip data to value recreation sites: A comparison with individual-level methods," 2023 Annual Meeting, July 23-25, Washington D.C. 335687, Agricultural and Applied Economics Association.

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    Keywords

    Research Methods/ Statistical Methods;

    JEL classification:

    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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