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A New Approach to Random Utility Modeling using the Dirichlet Multinomial Distribution

  • J. Shonkwiler
  • Nick Hanley

    ()

In this paper we introduce a new econometricapproach to analyzing recreational site choicedata, the Dirichlet multinomial model. Thismodel, which nests the standard conditionalmultinomial logit model, can accommodateover-dispersed data and may provide moreefficient estimators of coefficients andconsequent welfare measures than the standardconditional logit model, which is so widelyused in the Random Utility Model approach torecreation demand. We illustrate thisDirichlet approach using a data set of rockclimbers in Scotland, and study the impacts onper-trip consumers surplus of alternativemanagement strategies for popular rock climbingsites. Results show that the Dirichletmultinomial approach produces coefficient andwelfare estimates having smaller samplingvariability in this case. We also compareclassical welfare measures with their posteriorequivalents, which allow for welfare changes tobe dis-aggregated. Copyright Kluwer Academic Publishers 2003

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File URL: http://hdl.handle.net/10.1023/B:EARE.0000003597.88521.24
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Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 26 (2003)
Issue (Month): 3 (November)
Pages: 401-416

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Handle: RePEc:kap:enreec:v:26:y:2003:i:3:p:401-416
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100263

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  1. Gourieroux Christian & Monfort Alain & Trognon A, 1981. "Pseudo maximum likelihood methods : theory," CEPREMAP Working Papers (Couverture Orange) 8129, CEPREMAP.
  2. Nick Hanley & Gary Koop & Begoña Álvarez-Farizo & Robert E. Wright & Ceara Nevin, 2001. "Go climb a mountain: an application of recreation demand modelling to rock climbing in Scotland," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 36-52.
  3. Shaw, W. Douglass & Jakus, Paul M., 1996. "Travel Cost Models Of The Demand For Rock Climbing," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), October.
  4. Therese C. Grijalva & Robert P. Berrens & Alok K. Bohara & Paul M. Jakus & W. Douglass Shaw, 2002. "Valuing the Loss of Rock Climbing Access in Wilderness Areas: A National-Level, Random-Utility Model," Land Economics, University of Wisconsin Press, vol. 78(1), pages 103-120.
  5. Daniel McFadden, 1996. "Computing Willingness-to-Pay in Random Utility Models," Working Papers _011, University of California at Berkeley, Econometrics Laboratory Software Archive.
  6. Hellerstein, Daniel, 1991. "Using Count Data Models in Travel Cost Analysis with Aggregate Data," MPRA Paper 25264, University Library of Munich, Germany.
  7. Nick Hanley & Robert Wright & Gary Koop, 2002. "Modelling Recreation Demand Using Choice Experiments: Climbing in Scotland," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(3), pages 449-466, July.
  8. W. Douglass Shaw, 2002. "Testing the Validity of Contingent Behavior Trip Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 401-414.
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