Effect of substitutes in contingent valuation for a private market good

Ji Yong Lee, John A. Fox, Rodolfo M. Nayga, Jr

Research output: Contribution to journalArticle

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.

Original languageEnglish
JournalApplied Economics Letters
DOIs
Publication statusAccepted/In press - 2018 Jan 1
Externally publishedYes

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Keywords

  • Contingent valuation
  • field substitutes
  • market good

ASJC Scopus subject areas

  • Economics and Econometrics

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