Journal
AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
Volume 90, Issue 4, Pages 994-1010Publisher
WILEY
DOI: 10.1111/j.1467-8276.2008.01155.x
Keywords
destination site choice; mixed logit; nonmarket valuation; outdoor recreation; random parameters; random willingness to pay; travel cost
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We compare two approaches for estimating the distribution of consumers' willingness to pay (WTP) in discrete choice models. The usual procedure is to estimate the distribution of the utility coefficients and then derive the distribution of WTP, which is the ratio of coefficients. The alternative is to estimate the distribution of WTP directly. We apply both approaches to data on site choice in the Alps. We find that the alternative approach fits the data better, reduces the incidence of exceedingly large estimated WTP values. and provides the analyst with greater control in specifying and testing the distribution of WTP.
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