A COMPLETE CHARACTERIZATION OF THE LINEAR, LOG-LINEAR, AND SEMI-LOG INCOMPLETE DEMAND SYSTEM MODELS

This study extends LaFranceÂ’'s (1985, 1986, 1990) previous research by deriving the necessary parameter restrictions for two additional classes of incomplete demand system models to be integrable. In contrast to LaFrance'Â’s earlier work, this analysis considers models that treat expenditures and expenditure shares as the dependent variables in the specified incomplete demand systems. With environmental economists increasingly turning to demand system approaches to value changes in environmental quality, these new results significantly expand the menu of empirical specifications which can be used to fit a given data set. Moreover, the alternative specifications considered in this study, in combination with LaFrance'Â’s original work, represent a complete characterization of the linear, log-linear, and semi-log incomplete demand system models.Research Methods/ Statistical Methods,

Incomplete Demand Systems, Corner Solutions, and Welfare Measurement

This paper demonstrates how corner solutions raise difficulties for the specification, estimation, and use of incomplete demand systems for welfare measurement with disaggregate consumption data, as is common in the outdoor recreation literature. A simple analytical model of consumer behavior is used to elucidate the potential biases for welfare measurement arising from modeling the demand for M goods as a function of M + N prices (N > 1) and income when individuals do not consume all goods in strictly positive quantities. Results from a Monte Carlo experiment suggest that these biases can be substantial for large-scale policy shocks when prices are highly correlated.demand systems, welfare analysis, corner solutions, microeconometrics, Environmental Economics and Policy,

Distributional and Efficiency Impacts of Gasoline Taxes: An Econometrically Based Multi-market Study.

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Distributional and efficiency impacts of gasoline taxes.

This article examines the gasoline tax option being proposed in the U.S. in 2005, employing an econometrically based multi-market simulation model to explore the policy's efficiency and distributional implications. Because of its potential to improve the environment and enhance national security, reducing automobile-related gasoline consumption has become a major U.S. public policy issue. Policy impacts both in the aggregate and across households distinguished by income, car-ownership, and other characteristics were examined. Simulation results show that whether a gas-tax increase is regressive in its impact depends on the manner in which the tax revenues are recycled to the economy. The results also reveal significant heterogeneity in welfare impacts within household income groups, thus highlighting the importance of accounting for household heterogeneity in tastes and car-ownership in evaluating distributional impacts.

INCORPORATING OBSERVED CHOICE IN THE CONSTRUCTION OF WELFARE MEASURES FROM RANDOM UTILITY MODELS

This paper proposes an approach to welfare measurement with random utility models that, in contrast to traditional approaches, incorporates the implications of an individual's observed choice

Incomplete Demand Systems, Corner Solutions, and Welfare Measurement

This paper demonstrates how corner solutions raise difficulties for the specification, estimation, and use of incomplete demand systems for welfare measurement with disaggregate consumption data, as is common in the outdoor recreation literature. A simple analytical model of consumer behavior is used to elucidate the potential biases for welfare measurement arising from modeling the demand for M goods as a function of M + N prices (N > 1) and income when individuals do not consume all goods in strictly positive quantities. Results from a Monte Carlo experiment suggest that these biases can be substantial for large-scale policy shocks when prices are highly correlated

A COMPLETE CHARACTERIZATION OF THE LINEAR, LOG-LINEAR, AND SEMI-LOG INCOMPLETE DEMAND SYSTEM MODELS

This study extends LaFrance's (1985, 1986, 1990) previous research by deriving the necessary parameter restrictions for two additional classes of incomplete demand system models to be integrable. In contrast to LaFrance's earlier work, this analysis considers models that treat expenditures and expenditure shares as the dependent variables in the specified incomplete demand systems. With environmental economists increasingly turning to demand system approaches to value changes in environmental quality, these new results significantly expand the menu of empirical specifications which can be used to fit a given data set. Moreover, the alternative specifications considered in this study, in combination with LaFrance's original work, represent a complete characterization of the linear, log-linear, and semi-log incomplete demand system models

Weather Effects on the Demand for Coastal Recreational Fishing: Implications for a Changing Climate

PLEASE SEE UPDATED VERSION, CEnREP Working Paper No. 19-016, at https://ageconsearch.umn.edu/record/283949... This paper estimates the demand for coastal recreational fishing in the Atlantic and Gulf Coast regions of the United States and evaluates the potential welfare implications resulting from climate change. Specifically, we use short-run variability in temperature and precipitation to estimate the effect of weather on participation in shoreline fishing in coastal waters. We then simulate how climate change may impact those choices over time. Parameter estimates are combined with predictions from five global climate models under three emissions scenarios to estimate welfare changes associated with climate change over multiple time horizons. Overall, our results suggest the effects of climate change on shoreline recreational fishing are positive and significant in the long run (2080-2099) with simulation results predicting annual gains of up to $6.83 per trip, or$304 million in the aggregate. The results are decomposed seasonally and regionally to reveal substantial heterogeneity. Welfare gains associated with increasing temperatures in the non-summer months outweigh modest losses in the summer months. The Gulf Coast region has the potential to realize welfare losses, while the Mid-Atlantic and New England are likely to experience welfare gains in all seasons. Of the nearly 45 million annual trips predicted by the model, climate change may increase participation by 0.2 to 2.2 percent in the aggregate. Given the modest negative demand responses in the Gulf and Southeast regions, evidence of adaptation is identified from a model of night fishing. Results suggest that recreational anglers may shift their activities to night as daily high temperatures increase rather than change their participation decision

Welfare Measurement and Representative Consumer Theory

This paper generalizes results from Anderson, De Palma, and Thisse [1992] linking individual random utility and aggregate representative individual demand models, to consider a comparable relation for the willingness to pay functions for quality attributes of marketed goods. It also suggests how the logic can be used to describe links between choice occasion and aggregate models (across occasions) for an individual