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Discrete and Continuous Preference Heterogeneity in a Kuhn-Tucker Model: Beach Recreational Demand

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  • Kei Kabaya
  • Koichi Kuriyama

Abstract

This study extended an existing Kuhn-Tucker (KT) model to integrate a mixture of discrete and continuous preference heterogeneity to address taste variations at individual and group levels. Specifically, we introduced random parameters into site quality attributes in a latent segmentation KT framework. In an empirical application to beach recreational demand, our proposed model statistically dominated other conventional specifications and revealed heterogeneous preferences for beach quality across and within groups. Our welfare analysis further showed that ignoring either the continuous or discrete component of the mixing distributions might lead to biased welfare estimates as well as opposite policy implications.

Suggested Citation

  • Kei Kabaya & Koichi Kuriyama, 2021. "Discrete and Continuous Preference Heterogeneity in a Kuhn-Tucker Model: Beach Recreational Demand," Land Economics, University of Wisconsin Press, vol. 97(3), pages 548-561.
    • Handle: RePEc:uwp:landec:v:97:y:2021:i:3:p:548-561
    Note: DOI: 10.3368/wple.97.3.021120-0016R1
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    More about this item

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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