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Effect of substitutes in contingent valuation for a private market good

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  • Ji Yong Lee
  • John A. Fox
  • Rodolfo M. Nayga

Abstract

Economic theory predicts a decrease in valuation as the availability of substitutes increases. This paper describes a contingent valuation (CV) survey that investigates the effect of substitutes on valuation of private market goods. Using an approach that compares willingness to pay (WTP) values elicited from a CV question that accounts for substitutes with WTP values elicited from a similar question without substitutes, we find that allowing for substitutes can moderate WTP values. For the item valued in this study, a hamburger sandwich, allowing for substitutes was associated with a reduction of from 10% to 16% in stated values.

Suggested Citation

  • Ji Yong Lee & John A. Fox & Rodolfo M. Nayga, 2019. "Effect of substitutes in contingent valuation for a private market good," Applied Economics Letters, Taylor & Francis Journals, vol. 26(14), pages 1153-1156, August.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:14:p:1153-1156
    DOI: 10.1080/13504851.2018.1540837
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    Cited by:

    1. Mustafa Ozguven & Chong Yan Gao & Mohamed Yacine Si Tayeb, 2021. "The Utilization of Autoregressive Forecasting Models in Strategic Management," International Journal of Science and Business, IJSAB International, vol. 5(7), pages 170-185.

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