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Willingness to Pay for Car Safety: Evidence from Sweden

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Abstract

This study estimates a marginal willingness to pay (WTP) function for a road-mortality risk reduction. Observed marginal WTP from the Swedish car market is used and found to be positively correlated with the baseline risk of the cars. Among owner attributes, we find that income increases marginal WTP, whereas background risk reduces marginal WTP. Also, when comparing the estimated monetary value of a non-marginal risk reduction derived from the integral of the marginal WTP-function with an estimate based on marginal WTP, we find that the estimates are different and that the difference is 15-25 percent for larger estimates, but negligible for smaller risk reductions (which is in line with expectations).

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Bibliographic Info

Paper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number 2006:7.

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Length: 22 pages
Date of creation: 20 Sep 2006
Date of revision:
Publication status: Published in Environmental and Resource Economics, 2008, pages 579-594.
Handle: RePEc:hhs:vtiwps:2006_007

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Postal: VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden
Phone: +46-13-20 40 00
Fax: +46-13-14 14 36
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Web page: http://www.vti.se/tek
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Keywords: car safety; hedonic prices; non-marginal willingness to pay; background risk;

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References

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Citations

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Cited by:
  1. Henrik Andersson & James Hammitt & Gunnar Lindberg & Kristian Sundström, 2013. "Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(3), pages 437-456, November.
  2. ANDERSSON Henrik & JONSSON Lina & OGREN Mikael, 2008. "Property Prices and Exposure to Multiple Noise Sources: Hedonic Regression with Road and Railway Noise," LERNA Working Papers 08.25.269, LERNA, University of Toulouse.
  3. Mouloud Haddak & Nathalie Havet & Marie Lefèvre, 2014. "Willingness-to-pay for road safety improvement," Working Papers 1406, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.

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