Empirical Specification Requirements for Two-Constraint Models of Recreation Choice |
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Authors: | Douglas M. Larson,& Sabina L. Shaikh |
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Affiliation: | Department of Agricultural and Resource Economics at the University of California, Davis, CA 95616,;Food &Resource Economics Group, Faculty of Agricultural Sciences, University of British Columbia |
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Abstract: | Two-constraint models are common in recreation-demand analysis because of the important role time can play in consumer choices. Two versions of Roy's identity hold for these models and imply coefficient restrictions on empirical demand functions. The two-constraint restrictions are fully observable and can be expressed in a form analogous to the Slutsky–Hicks equations in single-constraint consumer models. Empirical specifications that use full prices and full budgets can be consistent with the two-constraint models, both when the marginal value of time is exogenous and is endogenous, but models with full prices and money income alone are not. |
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Keywords: | recreation demand two-constraint consumer choice value of time |
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