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Does ignoring multidestination trips in the travel cost method cause a systematic bias?

  • Timo Kuosmanen
  • Eleonora Nillesen
  • Justus Wesseler

The present paper demonstrates that treating multidestination trips (MDT) as single-destination trips does not involve any systematic upward or downward bias in consumer surplus (CS) estimates because the direct negative effect of a price increase (treating MDT as a single-destination trip) is offset by a shift in the estimated demand curve. Still, ignoring MDT can greatly underestimate or overestimate the CS. In addition, we demonstrate that there is a sound theoretical basis for using preference information for allocating travel costs between different sites included in the MDT package. A novel extreme value approach is proposed, which does not require any overly restrictive assumptions about consumer preferences. This approach is applied to the zonal travel cost model of the Bellenden Ker National Park, Australia. Parametric and non-parametric estimation techniques are used for calculating CS estimates, and the effects of different MDT treatments and estimation methods are compared. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2004.

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Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 48 (2004)
Issue (Month): 4 (December)
Pages: 629-651

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Handle: RePEc:bla:ajarec:v:48:y:2004:i:4:p:629-651
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  1. Cooper, Joseph C., 1999. "Nonparametric and Semi-Nonparametric Recreational Demand Analysis," MPRA Paper 24780, University Library of Munich, Germany.
  2. Nick Hanley & Robin Ruffell, 1992. "The Valuation of Forest characteristics," Working Papers 849, Queen's University, Department of Economics.
  3. K. G. Willis & G. D. Garrod, 1991. "An Individual Travel-Cost Method Of Evaluating Forest Recreation," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(1), pages 33-42.
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