Book contents
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 Some basic concepts
- 3 The concept of consumer surplus
- 4 Topics in the theory of consumer surplus measures
- 5 Consumer surplus measures in quantity-constrained regimes
- 6 Public goods and externalities in consumption
- 7 How to overcome the problem of preference revelation; practical methodologies
- 8 Discrete choice models and environmental benefits
- 9 Consumer's surplus in an intertemporal context
- 10 Welfare change measures in a risky world
- 11 Money measures of the total value of environmental assets
- Notes
- Bibliography
- Index
8 - Discrete choice models and environmental benefits
Published online by Cambridge University Press: 10 January 2011
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 Some basic concepts
- 3 The concept of consumer surplus
- 4 Topics in the theory of consumer surplus measures
- 5 Consumer surplus measures in quantity-constrained regimes
- 6 Public goods and externalities in consumption
- 7 How to overcome the problem of preference revelation; practical methodologies
- 8 Discrete choice models and environmental benefits
- 9 Consumer's surplus in an intertemporal context
- 10 Welfare change measures in a risky world
- 11 Money measures of the total value of environmental assets
- Notes
- Bibliography
- Index
Summary
There are important situations in which consumers face a discrete rather than a continuous set of choices. For example, a household cannot simultaneously visit two different recreation sites. Quality changes, such as pollution or the development of new sites, may induce households to switch from trips to one area to trips to another. In order to cope with such discrete choice situations, the continuous choice models of the previous chapters must be modified.
To my knowledge, no general discrete choice theory is available for use in deriving consumer surplus measures. A few authors, notably Mäler (1974) and Small and Rosen (1981), have rigorously derived surplus measures for particular classes of discrete choices. Mäler considers a good which must be purchased in a given quantity or not at all. Small and Rosen concentrate on the case when two goods are mutually exclusive, but also briefly discuss other kinds of discrete choice situations. By contrast, Hau (1985) considers the case where the consumer does not know in advance which good he will choose, except up to a probability distribution. Recently, Hanemann (1984a) has developed a unified framework for formulating demand models which are suitable for empirical application.
This chapter concentrates on a case which is slightly different from those cases dealt with by the mentioned authors, but the analysis is much inspired by the work of Small and Rosen (1981).
- Type
- Chapter
- Information
- The Economic Theory and Measurement of Environmental Benefits , pp. 126 - 146Publisher: Cambridge University PressPrint publication year: 1987