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Does economic endogeneity of site facilities in recreation demand models lead to statistical endogeneity?

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  • Chen, Min
  • Lupi, Frank

Abstract

Different kinds of endogeneity problems in Random Utility Models of recreation demand have been studied in previous literature. Some site characteristics, like facilities, could be endogenous in an economic sense due to the interplay of supply and demand. That is, it may be that more popular recreation sites tend to have better site characteristics since managers with limited budgets would be more willing to invest in them. If recreation site improvements are more likely to occur at the more popular sites, then might this economic endogeneity cause problems for econometric models linking site demand to facilities. In this paper, we use Monte Carlo simulations to test whether this economic endogeneity will lead to statistical endogeneity.

Suggested Citation

  • Chen, Min & Lupi, Frank, 2009. "Does economic endogeneity of site facilities in recreation demand models lead to statistical endogeneity?," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49449, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea09:49449
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    5. Murdock, Jennifer, 2006. "Handling unobserved site characteristics in random utility models of recreation demand," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 1-25, January.
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    12. Peter P. Caulkins & Richard C. Bishop & Nicolaas W. Bouwes, 1985. "Omitted Cross-Price Variable Biases in the Linear Travel Cost Model: Correcting Common Misperceptions," Land Economics, University of Wisconsin Press, vol. 62(2), pages 182-187.
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    Keywords

    Random Utility Models; Facilities; Endogeneity; Monte Carlo simulations; Environmental Economics and Policy;

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