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Welfare impact of information with experiments: the crucial role of the price elasticity of demand

Author

Listed:
  • Stephan Marette

    (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Jayson L. Lusk

    (OSU - Oklahoma State University [Stillwater])

  • Jutta Roosen

    (Marketing and Consumer Research - TUM - Technische Universität Munchen = Technical University Munich = Université Technique de Munich)

Abstract

This paper focuses on the welfare effects of information computed from experimental methods eliciting willingness-topay. First, a theoretical model shows that the size of the welfare variation is related to the elasticity of the demand under the absence of information about a characteristic. Second, our estimates indicate that consumer demand from a laboratory auction is more price-elastic than time-series demand for similar products. As a result, the welfare change directly derived from individual willingness-to-pay is overestimated compared to the welfare change linked to an approach combining time-series demand with the mean willingness-to-pay premium.

Suggested Citation

  • Stephan Marette & Jayson L. Lusk & Jutta Roosen, 2010. "Welfare impact of information with experiments: the crucial role of the price elasticity of demand," Post-Print hal-01172946, HAL.
    • Handle: RePEc:hal:journl:hal-01172946
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    Cited by:

    1. Marette Stéphan & Roosen Jutta & Blanchemanche Sandrine, 2011. "The Combination of Lab and Field Experiments for Benefit-Cost Analysis," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(3), pages 1-36, August.

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    Keywords

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    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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