Hedonic Onsight Cost Model of Recreation Demand
For many recreational activities onsite pecuniary costs can be a significant portion of the cost of a recreational trip. Onsite expenditures, however, often depend upon endogenous quality choices made by the household. We formulate a recreation demand model that formally accounts for household selection of quality of onsite time. Household behavior is constrained by income, prices, and the onsite hedonic price schedule. Assuming complete optimization, a reduced form Marshallian demand curve for recreation trips still results and a specialized version of Roy’s Identity provides a basis for welfare analysis. Instrumenting for endogenous quality choices does not improve demand estimation.
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