strategic behavior in contests comment almost by definition contests involve strategy this is especially true in contests between unevenly matched contenders in a recent article avinash dixit 1987 explored strategic commitment in contests between a favorite and an underdog the favorite is defined as the player whose chance of victory exceeds one half at the nash equilibrium an underdog s chance is less than one half dixit concludes that if the favorite has the opportunity to move first then he will overcommit effort compared with the nash equilibrium an important implication of the favorite overcommitting effort is that strategic behavior leads to greater social costs see gordon tullock 1980 the opposite holds if the underdog has the opportunity to move first this paper demonstrates that the favorite will never overcommit effort given endogenous order of moves the favorite finds it advantageous to wait until the underdog moves surprisingly the underdog s best strategy is not to wait but to make the first move throwing the first punch the equilibrium order of play is for the underdog to move before the favorite in this equilibrium one never observes overcommitment of effort consequently extending dixit s model to allow for endogenous order of moves suggests that strategic behavior in contests will lead to undercommitment compared with nash behavior

state dependence and heterogeneity in fishing location choice to explore the distinction between state dependence and heterogeneity in repeated decisions this paper combines a mixed logit model with a state dependence parameterization from the marketing literature to study fishing location choices of commercial sea urchin divers in california it examines implications of ignoring either effect and finds in all cases that true state dependence is an important determinant of location choice consequently spatial policies like marine reserves can lead to differences in the short and long run behavioral responses of the fishing fleet under some specifications random preference parameters are statistically significant when state dependence is excluded from the model but when it is included random preference parameters are not significant in other specifications including state dependence only dampens the variability in preference parameters these results highlight the importance of gathering and analyzing diary type data for commercial fisheries as well as for similar choice problems in recreation demand

understanding heterogeneous preferences in random utility models a latent class approach a finite mixture approach toconditional logit models is developed in whichlatent classes are used to promoteunderstanding of systematic heterogeneity the model is applied to wilderness recreationin which a branded choice experiment involvingchoice of one park from a demand system wasadministered to a sample of recreationists the basis of membership in the classes orsegments in the sample involved attitudinalmeasures of motivations for taking a trip aswell as their stated preferences overwilderness park attributes the econometricanalysis suggested that four classes of peopleexist in the sample using the model toexamine welfare measures of some hypotheticalpolicy changes identified markedly differentwelfare effects than the standard singlesegment model and provided insight into thedifferential impact of alternative policies

controlling for observed and unobserved site characteristics in rum models of recreation demand hatch act and state of iowa the iowa department of natural resources and the u s environmental protection agency s science to achieve results star program grant r830818

contests with multiple rounds this paper studies contests where players have the flexibility to add to their previous efforts after observing their rivals most recent effort in an intermediate stage it is found that 1 contrary to previous findings the stackelberg outcome where the underdog leads and the favorite follows cannot be an equilibrium 2 there are multiple subgame perfect equilibria all occurring on the underdog s usual one shot reaction function in between and including the one shot cournot nash and stackelberg outcome with the favorite leading 3 the total equilibrium effort is typically greater than or equal to what a one shot cournot nash play would predict and 4 in settings where players can choose whether or not to disclose their early actions to the rival both the favorite and the underdog disclose in equilibrium applications in sports lobbying and r d races are discussed

serial nonparticipation in repeated discrete choice models we consider alternative econometric strategies for addressing serial nonparticipation that is repeated choice of the same alternative or same type of alternative across a series of choice occasions in data typically analyzed within the repeated discrete choice framework single and double hurdle variants of the repeated discrete choice model are developed and applied to choice experiment and multisite seasonal recreation demand data our results suggest that hurdle models can generate significant improvements in statistical fit and qualitatively different policy implications particularly in choice experiment applications where the proper treatment of serial nonparticipation is relatively more ambiguous

separability partial demand systems and consumer s surplus measures abstract in practice complete demand systems are not estimated rather either an incomplete demand system is estimated or separability is invoked and a partial demand system is estimated this paper considers the relationship between the conventional compensating variation equivalent variation and the corresponding welfare measure that can be derived from a partial demand system and the current budget allocation to the separable group even assuming the separability assumption invoked is appropriate these partial measures provide in general only a limited amount of information about the compensating variation and no information about the equivalent variation great care is therefore needed when using partial welfare measures to evaluate policy

nonlinear income effects in random utility models random utility models rums are used in the literature to model consumer choices from among a discrete set of alternatives and they typically impose a constant marginal utility of income on individual preferences this assumption is driven partially by the difficulty of constructing welfare estimates in models with nonlinear income effects recently mcfadden 1995 developed an algorithm for computing these welfare impacts using a monte carlo markov chain simulator for generalized extreme value variates this paper investigates the empirical consequences of nonlinear rums in the case of sportfishing modal choice while refining and contrasting the available methods for welfare estimation

production and conflict models versus rent seeking models a production and conflict p c model and a rent seeking rs model are compared for one group two groups and k groups adding a new agent enlarges the pie in the p c model but causes the fixed size pie to be allocated on one more rent seeker in the rs model the total production or rent is distributed within and between groups according to the within group and between group decisiveness productive and fighting efficiencies and group sizes play a role the collective action problem is more severe for the rs model as group size increases the ratio of within group to between group fighting increases marginally toward a constant for the p c model while it increases convexly for the rs model adding an additional agent to each of two groups is more detrimental to the utilities in rs groups than in p c groups while adding a second group of agents when there is already one group of agents gives the reverse result the severe between group fighting in the p c model for many groups causes the p c model to be preferable for few groups while the rs model is preferable for many groups applications are considered to intergroup migration inside versus outside ownership divestitures mergers and acquisitions multidivisional versus single tier firms and u form versus m form of economic organization

the strategic equivalence of rent seeking innovation and patent race games abstract we establish the strategic equivalence of a variety of rent seeking contests innovation tournaments and patent race games the results allow us to disentangle negative and positive externalities and to apply theorems and results intended for rent seeking games to other games and vice versa we conclude with several examples that highlight the practical utility of our results

spatial boundaries and choice set definition in a random utility model of recreation demand we are concerned with the definition of choice set used in random utility models of recreation demand in particular we are concerned with the spatial boundaries used to define choice sets in this paper using a model of day trip fishing in maine we examine the sensitivity of parameter and welfare estimates to changes in the spatial boundary we find that there exists some threshold distance beyond which adding more sites to the choice set has negligible effects on the estimation results

two nested constant elasticity of substitution models of recreational participation and site choice an alternatives model and an expenditures model two demand modelsof recreational participation and s ite choice are developed an alternatives model and an expenditures model both assume maximization of utility over the year so allow for diminishing marginal utility they do not impose the restrictive assumption that where one goes on a trip isindependent of where one plansto go on other occas ions es timation iswith a nes ted constant elasticity of substitution preference ordering it is relatively easy to estimate because of global regularity it allowss itesto be complements and it hasthe potential to be locally flexible the application is to atlantic salmon fishing

a repeated nested logit model of atlantic salmon fishing participation and site choice for atlantic salmon fishing are modeled in the context of a repeated three level nested logit model consumer s surplus measures are derived for different levels of species availability in the penobscot river the most important salmon river in new england for comparison six other travel cost models are estimated these include restrictive cases of the nested logit model a partial demand model and two single site demand models comparisons across these models indicate the importance of modeling the participation decision including income effects and of adopting a nested logit structure rather than a single level logit structure

testing benefits transfer of forest recreation values over a twenty year time horizon we conduct a functional benefit transfer over 20 years of total willingness to pay based on carborne forest recreation in 52 forests using a mixed logit specification of a random utility model and geographic information systems to allow heterogeneous preferences across the population and for heterogeneity over space results show that preferences for some forest attributes such as species diversity and age as well as transport mode have changed significantly over the period updating the transfer model with present total demand for recreation improves the error margins by an average of 282 average errors of the best transfer model remain 25

static modeling of dynamic recreation behavior implications for prediction and welfare estimation abstract this paper examines the consequences of using a static model of recreation trip taking behavior when the underlying decision problem is dynamic specifically we examine the implications for trip forecasting and welfare estimation using a panel dataset of lake michigan salmon anglers for the 1996 and 1997 fishing seasons we derive and estimate both a structural dynamic model using bellman s equation and a reduced form static model with trip probability expressions mimicking those of the dynamic model we illustrate an inherent identification problem in the reduced form model that creates biased welfare estimates and we discuss the general implications of this for the interpretation of preference parameters in static models we then use both models to simulate trip taking behavior and show that although their in sample trip forecasts are similar their welfare estimates and out of sample forecasts are quite different

two player asymmetric contests with ratio form contest success functions i examine players equilibrium effort levels in two player asymmetric contests with ratio form contest success functions i first characterize the nash equilibrium of the simultaneous move game i show that the equilibrium effort ratio is equal to the valuation ratio and that the prize dissipation ratios for the players are the same i also show that the prize dissipation ratio for each player is less than or equal to the minimum of the players probabilities of winning at the nash equilibrium and thus never exceeds a half then i examine how the equilibrium effort ratio the prize dissipation ratios and the players equilibrium effort levels respond when the players valuations for the prize or their abilities change jel d72 c72 i introduction a contest is a situation in which players compete with one another by expending irreversible effort to win a prize typical examples are various types of rent seeking contests competition among firms to win a monopoly rent secured under government protection or by a government procurement contract competition between domestic and foreign firms to obtain governmental trade policies favorable to them competition among firms to acquire a rent generated by rights of ownership to an import quota and competition among firms to capture rents created by governmental decisions to establish tariffs or other trade barriers other examples of contests include auctions patent races research and development r d competition among firms litigation competition for jobs among job candidates competition among candidates to win promotion to higher ranks election campaigns between political candidates and competition between local governments to invite business firms government institutions or government owned corporations into their districts naturally due to their prevalence and importance in economies such contests have been studied by many economists loury 1979 lee and wilde 1980 tullock 1980 rogerson 1982 rosen 1986 appelbaum and katz 1987 dixit 1987 hillman and riley 1989 hirshleifer 1989 ellingsen 1991 nitzan 1991 1994 krishna and morgan 1997 che and gale 1998 hurley and shogren 1998 and konrad 2000 to name a few in this vast literature on the theory of contests one of the main issues is how much effort do the players exert in pursuit of the prize indeed it is of great interest because the players effort levels determine the profitability of the players engaging in the contest and in some cases they are revenues collected by the contest organizer or bribes given to government officials furthermore they account for other important outcomes of the contest for example in a rent seeking contest efforts expended by the players are viewed as social costs due to rent seeking activities so that total effort level is a measure of economic efficiency in an r d contest effort levels expended by the players these are r d expenditures of the firms determine the expected date of invention this article also addresses the issue how much effort do the players exert in pursuit of the prize but it differs from previous research by dealing with contests with ratio form contest success functions 1 specifically the novelty of this article is to consider two player asymmetric contests in which each player s probability of winning is a function of the ratio of the two players effort levels two player contests with ratio form contest success functions or two player contests that can be best modeled with ratio form contest success functions are easily observed in the real world examples include various types of two player rent seeking contests litigation between a plaintiff and a defendant election campaigns between two parties or candidates and r d competition between two firms consider for example a rent seeking contest in which two firms potential monopolists compete with each other to win a government monopoly franchise contract

annual fees and recreation choice models of recreation behavior have typically ignored the role of fixed annual fees such as the fee for a recreational license in determining choice and welfare we demonstrate how techniques from the literature on discrete continuous choice and two part tariffs can address a situation where fixed annual fees are essential to determining the choice of a recreation site we explore how accounting for value captured by fixed fees can influence the way resource changes are assessed

the demand for site specific recreational activities a characteristics approach abstract a model of constrained utility maximizing behavior is developed to explain how a representative individual allocates his ski days among alternative sites the physical characteristics of the ski areas and the individual s skiing ability are explicit arguments in the utility function the budget allocation is given along with the parametric costs to ski including travel costs entrance fees equipment costs and the opportunity cost of his time shares a site s share being the proportion of ski days that the individual spends at that site are derived and assumed multinomially distributed a stochastic specification which maintains the inherent properties of the shares maximum likelihood estimation confirms the basic hypothesis that costs ability and characteristics all are important determinants of the sites shares the model explains a large proportion of the skier s allocation of ski days a multinomial logit model of skier behavior is also developed and maximum likelihood estimates of its parameters are obtained examination of the summary statistics from my model and the logit model indicates that my model predicts the skier s choice of sites better than the logit model

modeling multiple objective recreation trips with choices over trip duration and alternative sites traditionally recreation demand studies have focused on single day single activity trips despite anecdotal and empirical evidence that many recreational trips involve overnight stays and multiple purposes this paper develops a random utility model that explores how visitors choose alternative sites and trip durations for multiple objective trips we focus on a recreational activity beach visits that appear to have significant proportions of the population taking single and multiple day trips and many of the multiple day trips involve multiple objectives multiple duration and multiple objective issues are incorporated in pricing trip costs the results of the research suggest that the accepted method for incorporating travel costs into random utility models can lead to biased estimates of the structural utility parameters and consequently biased measures of welfare in a multiple objective trip setting for single and multiple day users

welfare losses due to livestock grazing on public lands a count data systemwide treatment backcountry hikers willingness to pay for removing grazing from trails in the hoover wilderness is analyzed using a multinomial dirichlet negative binomial distribution this multivariate discrete distribution allows the direct calculation of seasonal welfare measures that are derived from an incomplete demand specification the welfare maximizing choice of activities is examined on a trail by trail basis using the results of the analysis our findings suggest that a mix of hiking and grazing activities provide the greatest social welfare

distributional conflict in organizations abstract hierarchy can function as an instrument to channel influence activities or power struggles in organizations contrary to what has frequently been argued we show that multi divisional organizations may involve lower influence costs than single tier organizations even though they offer more scope for organizational conflict and have more executives that can be influenced these benefits derive from two effects first part of the conflict in multi divisional organizations takes place on the division level where a small number of agents fight over only a fraction of the overall prize second by grouping agents into common divisions multi divisional organizations create free rider problems in rent seeking our model sheds new light on the desirability of divestitures and the transition from the u to the m form by us corporations in the 1920s

estimation and welfare analysis with large demand systems we develop an approach for estimating individual or household level preferences for a large set of quality differentiated goods and for constructing hicksian welfare measures within the demand system framework our approach uses a maximum simulated likelihood procedure to recover estimates of the structural parameters and a multistage monte carlo markov chain algorithm for constructing hicksian consumer surplus estimates we illustrate our approach with a recreation dataset consisting of day trips to 62 mid atlantic beaches

model uncertainty in characterizing recreation demand a bayesian variable selection procedure is used to control for uncertainty in the specification of a recreational demand model specifically we propose a model that draws on the bayesian paradigm to integrate the variable selection process into model estimation and to reflect the accompanying uncertainty about which is the best specification in subsequent counterfactual predictions the advantage of this procedure over previous non bayesian approaches is that it overcomes the problem of pre testing in specification searches in our application evaluating demand for recreational lake usage in iowa we find clear evidence that site attributes such as lakes size handicap facilities and wake restrictions do impact lake usage there is also evidence that water quality matters in household recreation choices indeed contrary to abidoye et al am j agricult econ 2012 in which only a single functional form is considered we find clear evidence that water quality matters with posterior probability of less that 10 associated with a model without any water quality variables this suggests that the flexibility that the bayesian variable selection model affords in capturing the linkage between recreation demand and site characteristics can be important

asymmetric two stage group rent seeking comparison of two contest structures two variations of a two stage rent seeking contest areconsidered in the first stage of the between groupmodel groups compete through the expenditure of resources bytheir members based on group expenditures one winning groupis probabilistically determined on the second stage membersof the winning group compete with one another for an exogenousprize in the semi finals model a player is chosen fromeach group and then these players compete for the prize groups differ in size or in their valuation of the prize subgame perfect equilibrium solutions are constructed forthese two contest structures

an empirical investigation of the consistency of nested logit models with utility maximization global conditions under which nested logit models are consistent with utility maximization are provided by daly and zachary and by mcfadden recently borsch supan and herriges and kling have provided conditions under which a nested logit model is locally consistent however previous work has not discussed implementation of these conditions here three alternative approaches to checking and formally testing for the consistency conditions using classical statistics are investigated in addition a bayesian approach to interpreting and imposing the local consistency conditions is provided the application is based on anglers choices regarding sportfishing alternatives in southern california

combining revealed preference data with stated preference data a latent class approach a substantial literature exists combining data from revealed preference rp and stated preference sp sources aimed either at testing for the convergent validity of the two approaches used in nonmarket valuation or as a means of drawing on their relative strengths to improve the ultimate estimates of value in doing so it is assumed that convergence of the two elicitation approaches is an all or nothing proposition i e the rp and sp data are either consistent with each other or they are not the purpose of this paper is to propose an alternative framework that allows for possible divergence among individuals in terms the consistency between their rp and sp responses in particular we suggest the use of a latent class approach to segment the population into two groups the first group has rp and sp responses that are internally consistent while the remaining group exhibits some form of inconsistent preferences an em algorithm is employed in an empirical application that draws on the alberta and saskatchewan moose hunting data sets used in earlier combined rp and sp exercises the empirical results suggest that somewhere between one third and one half the sample exhibits consistent preferences we also examine differences in welfare estimates drawn from the two classes

utility in willingness to pay space a tool to address confounding random scale effects in destination choice to the alps 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 copyright 2008 oxford university press

choice set formation for outdoor destinations the role of motivations and preference discrimination in site selection for the management of public expenditures on protected areas effective public expenditure currently dominates the management focus of many protected areas this calls for explicit modeling of constraints and motivations that respectively obstruct and stimulate visits to selected outdoor destinations choice set formation is the result of screening and or inclusion of specific sites alternatives to form the set of sites considered in real choices evidence shows that the omission of a structural representation of choice set formation is harmful to econometric inference yet the literature has largely ignored the underlying behavioral phenomenon we show using a discrete choice experiment involving selection among seven recreational sites in an italian national park that choice set formation is behaviorally relevant even after controlling for preference discrimination motivations why visit are important determinants of preliminary site screening for choice set inclusion as well as site selection justifying the additional value of such modeling extension

calculating with income effects the compensating variation for a state change one can easily obtain exact closed form solutions for the compensating variation and equivalent variation in the presence of income effects when the policy being evaluated can be described as a change in the state of the world and one is willing to assume the policy change does not change the individual s epsilon draw alternatively if one assumes the policy changes the epsilon draw the expectation of the compensating variation is a complicated integral typically without a closed form the assumption that the policy does not affect one s epsilon draw is common and often reasonable but little discussed

the evolution of sharing rules in rent seeking contests incentives crowd out cooperation modern societies are characterized by competing organizations that rely predominantly on incentive schemes to align the behavior of their members with the organizations objectives this study contributes to explaining why in so many cases incentive schemes have gradually crowded out cooperation as an organization device our explanation does not draw on free riding the obvious achilles heel of cooperation but relies completely on fundamental group contest mechanisms by investigating a canonical rent seeking model and adopting an evolutionary perspective the analysis identifies shortcomings in previous results sets the record straight and explains why the process of incentivizing organizations is protracted

endogenous sharing rules in collective group rent seeking this paper examines the possibility of endogenous determination of intra group sharing rules in a collective group rent seeking game collective group rent seeking is considered as a two stage nash cournot game in which sharing rules are determined prior to individual decision on voluntary contribution the solution is subgame perfect and is obtained by backward induction in competition between two groups of the same size the nash equilibrium sharing rule of each group is to distribute rent to each according to relative effort total rent seeking outlays in this case are equal to those obtained by tullock 1980 when more than two groups compete for a rent the sharing rule based on relative effort is again likely to be the nash equilibrium strategy of each group the amount of total rent seeking outlays is also equal to that in tullock 1980 in a nutshell the rent is substantially dissipated if sharing rules are endogenously determined

the opportunity cost of travel time as a noisy wage fraction few issues are more important to welfare estimation with recreation demand models than the specification of the opportunity cost of travel time the two most common approaches to specifying this cost treat it as a fixed fraction of the recreationist s wage and either estimate the fraction done infrequently or assume it takes some value done commonly with references to results from the commute time literature used to justify the latter however these approaches lack firm conceptual rationales and the consequences of using them are not fully understood recognizing that information limitations often preclude more general approaches we use a joint recreation travel labor supply model to show that under relatively modest assumptions the opportunity cost of travel time can be expressed as a wage fraction with noise this formulation is straightforward to implement as part of random parameters based recreation demand models we then evaluate the welfare consequences of using the two approaches noted above which are special cases of the noisy wage fraction specification our results suggest that the more critical restriction to relax in opportunity cost of travel time specifications is the absence of noise rather than the specific level of the wage fraction

collective rent dissipation the theory of rent seeking was initiated by tullock 1967 1980 followed by krueger 1974 and posner 1975 and more recently extended in various directions by allard 1988 appelbaum and katz 1986a b c gradstein and nitzan 1989 hillman and katz 1984 1987 hillman and samet 1987 hillman and riley 1989 katz et al 1990 long and vousden 1987 ursprung 1990 and varian 1989 the purpose of this paper is to extend this theory by introducing the possibility of collective group rent seeking with voluntary individual decisions regarding their extent of participation in the collective rent seeking efforts

seeking rents by setting rents the political economy of rent seeking in recent years there has been a large number of papers on the subject of rent seeking most such works on rent seeking have taken the rent as exogenously determined by regulators regulators howeve r may also be expected and indeed have been shown to be rent seeke rs and hence the determination of the rent itself should be endogeniz ed to reflect the fact that the rent setters are themselves rent se ekers in this paper the authors do this by presenting an analysis o f the interaction of regulators firms and consumers within a rent s eeking framework where all three groups are assumed to be self motiva ted the analysis is carried out under alternative assumptions regard ing the nature of the market and the reaction functions of the partic ipants policy implications are drawn where appropriate copyright 1987 by royal economic society

a comparison of welfare estimates from four models for linking seasonal recreational trips to multinomial logit models of site choice we compare four methods of linking a site choice random utility model to a seasonal trip model the four approaches are those proposed by morey et al 1993 am j agric econom 75 578 592 hausman et al 1995 j public econom 56 1 30 parsons and kealy 1995 j environ econom management29 357 367 and feather et al 1995 j environ econom management29 214 227 we estimate the alternative models using a common data set and calculate a change in welfare for two policy scenarios across the models we find that there is little practical difference between the approaches of morey et al and hausman et al they are nearly the same mathematically and the welfare estimates in our empirical example are quite close the approaches of parsons and kealy and feather et al generated welfare estimates that were substantially different from the previous two approaches as well as from each other they also generated results that reveal the inconsistencies between their site choice and season trip models

the effect of nesting structure specification on welfare estimation in a random utility model of recreation demand an application to the demand for recreational fishing nested logit has become common in estimating random utility models of recreation demand because welfare analysis is often the objective of estimating these models it seems natural to ask what effect does the choice of nesting structure have on the welfare estimates generated by these models therefore we compare the results of nine nesting structures andfindthat the variation in welfare estimates across the models is not large our results are contrary to those of kling and thomson and shaw and ozog the difference appears to originate with differences in the estimated dissimilarity coefficients in the nested models

the travel cost model for lake recreation a comparison of two methods for incorporating site quality and substitution effects this paper empirically illustrates how different assumptions regarding recreationists decision making behavior affect the predicted changes in recreational activity given a water quality improvement a multinomial logit model which reallocates visits away from other sites to the improved site predicts a smaller outward shift of the recreationist s demand curve than the more traditional travel cost model which does not assume any reallocation of visits among sites

economic impacts of marine reserves the importance of spatial behavior abstract marine biologists have shown virtually unqualified support for managing fisheries with marine reserves signifying a new resource management paradigm that recognizes the importance of spatial processes in exploited systems most modeling of reserves employs simplifying assumptions about the behavior of fishermen in response to spatial closures we show that a realistic depiction of fishermen behavior dramatically alters the conclusions about reserves we develop estimate and calibrate an integrated bioeconomic model of the sea urchin fishery in northern california and use it to simulate reserve policies our behavioral model shows how economic incentives determine both participation and location choices of fishermen we compare simulations with behavioral response to biological modeling that presumes that effort is spatially uniform and unresponsive to economic incentives we demonstrate that optimistic conclusions about reserves may be an artifact of simplifying assumptions that ignore economic behavior

compensating variation and hicksian choice probabilities in random utility models that are nonlinear in income in this paper we discuss hicksian demand and compensating variation in the context of discrete choice we first derive hicksian choice probabilities and the distribution of the random expenditure function in the general case when the utilities are nonlinear in income we subsequently derive exact and simple formulae for the expenditure and choice probabilities under price policy changes conditional on the initial utility level this is of particular interest for welfare measurement because it enables the researcher to compute the distribution of compensating variation in a simple way we also derive formulae for the joint distribution of expenditure the choice before and after a policy change has been introduced

calibrating benefit function transfer to assess the conservation reserve program benefit transfer offers an inexpensive alternative to conducting an original study to determine economic value unfortunately benefit transfers can also result in biased welfare estimates in this paper we suggest a method of calibrating the benefit transfer to reduce this bias an empirical example to determine the benefits of the conservation reserve program on water based recreation illustrates the potentially large biases that can result if the transfer is not calibrated

limiting environmental program contradictions a demand systems application to fishery management economically efficient natural resource policy requires the comprehensive management of environmental improvements over a system of sites use of multisite demand and benefit models can reduce the number and cost of environmental program contradictions in this paper we present a multisite demand model that incorporates several quality dimensions for a system of new mexico fishing sites use of the model permits managers to improve total welfare at lower cost by simultaneously distributing opportunity across all elements in resource users choice sets model results show that errors that result from independently adding values of interdependent program elements approach 50

nonlinear income effects in random utility models revisiting the accuracy of the representative consumer approximation this article investigates the implications of nonlinear income effects in random utility models rum for measuring general equilibrium welfare impacts a popular approach in applied welfare analysis is to approximate the expected compensating variation cv for an amenity change as the cv of a representative consumer whose indirect utility is given by the expected maximum utility however this approach can be misleading in the case of nonmarginal changes as it implies that changes in income do not affect the consumer s choice in this case the true expected cv can be obtained via simulation empirical applications to recreational demand find that the bias from the representative approach is small this article re evaluates the accuracy of the representative consumer approximation in the context of measuring the general equilibrium welfare impacts of large environmental changes our findings suggest that though the representative consumer approximation could lead to biased point estimates of the expecte

a discrete choice model of recreational participation site choice and activity valuation when complete trip data are not available abstract a discrete choice model of the demand for site specific recreational activities is developed and estimated it simultaneously predicts both how many trips the individual will take and which site will be chosen on each trip the model is formulated to estimate demand when the data set reports the total number of trips in a given time period but the actual destinations for only a subset of the total the model also includes a correction for sample selectivity bias the application is marine recreational fishing the consumer s surplus associated with any change in supply conditions is derived and used to assess the impact of changes in species availability

conflict and rent seeking success functions ratio vs difference models of relative success the rent seeking competitions studied by economists fall within a much broader category of conflict interactions that also includes military combats election campaigns industrial disputes lawsuits and sibling rivalries in the rent seeking literature each party s success pi which can be interpreted either as the probability of victory or as the proportion of the prize won has usually been taken to be a function of the ratio of the respective resource commitments alternatively however pi may instead be a function of the difference between the parties commitments to the contest the contest success function csf for the difference from is a logistic curve in which as is consistent with military experience increasing returns apply up to an inflection point at equal resource commitments a crucial flaw of the traditional ratio model is that neither onesided submission nor two sided peace between the parties can ever occur as a cournot equilibrium in contrast both of these outcomes are entirely consistent with a model in which success is a function of the difference between the parties resource commitments

estimation and welfare calculations in a generalized corner solution model with an application to recreation demand the kuhn tucker model of wales and woodland 1983 provides a utility theoretic framework for estimating preferences over commodities for which individuals choose not to consume one or more of the goods due to the complexity of the model however there have been few applications in the literature and little attention has been paid to the problems of welfare analysis within the kuhn tucker framework this paper provides an application of the model to the problem of recreation demand in addition we develop and apply a methodology for estimating compensating variation relying on monte carlo integration to derive expected welfare changes

accounting for stochastic shadow values of time in discrete choice recreation demand models abstract in this paper a discrete choice recreation demand model that explicitly accounts for a stochastic shadow value of time function is proposed using data from a survey of san diego beach users the stochastic shadow value of time labor supply and beach choice are jointly estimated results from this joint estimation approach are compared with the familiar two step approach that estimates labor supply first and uses predicted values of time in the recreational site choice model the approaches produce markedly different welfare measures with the two step model which does not account for unobserved variability of time values predicting significantly higher values a monte carlo simulation illustrates how ignoring the stochastic nature of shadow value of time in discrete choice recreation demand models can bias model parameters and hence welfare estimates

estimating recreation preferences using hedonic travel cost and random utility models over the last decade several authors have questioned the validity of the hedonic travel cost model arguing instead that the random utility model is a superior method for valuing recrea tional site attributes this paper demonstrates that the two methods emanate from a similar utility theoretic framework yet in practice these methods differ in the assumptions made in their appli cation constraining the underlying utility functions to be consistent both models are applied to the valuation of recreational site attributes in the southeastern united states the way in which each method estimates preferences for site attributes is shown to depend critically on the method and the functional form of the underlying utility function micro economic theory began as an attempt to describe predict and value the demand and supply of consumption goods quality was largely ignored in initial theoretical treatises goods were assumed to be homogeneous over the last two decades however economists have started to address quality within the theory of demand environmental economists have extended the theory further to value the quality of recreational sites an important component of land management two distinct approaches for incorporating quality into recreational analyses have emerged the hedonic travel cost method htc and the discrete choice random utility methods rum the hedonic method views site attributes as though they were individual goods which are bundled together in a single purchase the random utility model treats quality as an index which is estimated by examining a discrete choice of alternative sites facing a consumer because the mathematical derivations for the hedonic rosen 1974 and random utility models mcfadden 1978 are quite different many practitioners do not recognize that both models are based on a common utility theoretic foundation in the first section of this paper we show how the hedonic and random utility methods are consistent with the same utility framework

the strategic choice of managerial incentives do firms with separate owners and managers maximize profits we address this question for an oligopoly where managers compete in quantities or prices as in the cournot or bertrand models and owners choose their managers incentives we find that there is a strategic aspect in the problem of selecting incentives and that profit maximizing behavior does not result in particular in the oligopoly we study the behavior of firms competing in quantity price more closely resembles perfectly competitive collusive behavior than cournot bertrand behavior

environmental quality preference and benefit estimation in multinomial probit models a simulation approach simulated maximum likelihood is used to estimate a random parameter multinomial probit model of destination choice for recreational fishing trips formulated to accommodate varying tastes and varying perceptions of environmental quality across individuals the restricted likelihood ratio test strongly rejects the independent probit model which is similar to the independent logit model in both the parameter and benefit estimates furthermore both the krinsky robb and bootstrapping procedures suggest that the benefit standard deviation of an environmental policy is found to be markedly lower higher when heterogeneous preferences are taken into account

deriving and testing efficient estimates of wtp distributions in destination choice models estimation of welfare measures is often a dominant driver in the empirical literature on nonmarket valuation to this end qualitative choice models based on random utility theory have been widely employed in outdoor recreation studies a frequent goal of applied studies has been the estimation of welfare changes associated with site attribute changes at recreation sites in order to inform regulatory policy and resource management we review the evolution of the methodology of random utility theory in this field with a focus on taste heterogeneity models and then focus on the recent proposal of specifying utility in the wtp space train k weeks m 2005 discrete choice models in preference space and willing to pay space in scarpa r alberini a eds applications of simulation methods in environmental and resource economics chapter 1 springer dordrecht pp 1 16 our empirical application is on outdoor alpine recreation data we emphasize the efficiency and direct testing that using the maximum simulated likelihood estimator affords to practitioners using the wtp space approach and illustrate these with examples

cost savings and activity levels in the ukcs a positive sum game abstract declining production in mature fields relatively small sizes of new fields the fall in oil prices and the high tax takes in old fields have combined to squeeze profit margins on petroleum exploitation in the ukcs achieved reductions in development and operating costs can help to sustain activity levels over the next two decades contractors as well as oil companies and the nation generally will benefit from the substantial number of induced extra field developments achieved from cost savings of 20

rent seeking for pure public goods in this paper we present a formal analysis of rent seeking for public goods by two or more groups with different numbers of individuals we begin by considering equally wealthy groups under risk neutrality a case which constitutes our basic model several surprising and interesting results emerge from the analysis of this basic case the problem is then extended to deal with a groups with different wealth levels and b risk aversion this last extension brings about a further crop of interesting and useful results

the value of changes in deer season length an application of the nested multinomial logit model increasing deer populations can be controlled through manipulatingharvest limits or season length while such actions often result in benefitsto hunters both motorists and the agricultural sector also benefit as alower deer population leads to fewer incidences of harmful human deerencounters traditional recreation demand models are often employed toexamine the welfare implications of changes in daily hunting bag limits studies measuring the effects of changes in season length however arenoticeably absent from the literature this study uses a nested randomutility model to examine hunter choice over site and season selection toderive the values of changes in season length

risk averse rent seekers and the social cost of monopoly power there is now quite general recognition that the social cost of monopoly power encompasses the resources expended by individuals seeking to become the beneficiaries of monopoly rents however since the activity of rent seeking is generally not observable direct estimates of resources expended in quests to acquire monopoly power are usually impossible to come by 1 as a consequence the indirect approach of taking the observed value of monopoly rents as indicative of the unobserved value of the resources expended in rent seeking is quite generally adopted in approaches to evaluation of the social cost of such activity

oil prices the start of an era abstract the paper argues that the international oil market has recently experienced fundamental changes which could well result in a significant discontinuity leading to much lower prices and consequent instability the paper develops an analytical framework to explain how oil prices are determined it then considers the future prospects for the various factors and driving forces which will influence future price it outlines in what way the oil market environment has altered and then considers two consequences of this new environment the volatility of oil prices and their absolute level

rent dissipation when rent seekers are budget constrained in the original tullock 1975 1980 game an individual bidder s probability of winning with a bid b is proportional to br where the exponent reflects economies of scale in rent seeking different interpretations can be given to these probabilities first one may view r as a reflection of the political culture alternatively one may view r as a choice variable for a politician intuition suggests that a society with a high tolerance for the selling of political favors and politicians who are receptive to rent seeking would both induce greater rent seeking expenditures than other societies all else equal this paper shows that a lower value of r can actually lead to more rent dissipation than a higher value this paper also reinforces two points concerning rent seeking first the analysis confirms the robustness of under dissipation of rents even in the face of entry second it points out the importance of distinguishing between rent seeking expenditures and rent dissipation when bidders must borrow for example total expenditure may understate rent dissipation

rent seeking with non identical sharing rules the primary object of this paper is to examine the role of differential sharing rules within a collective rent seeking setting on the possible non existence of nash equilibrium focusing on groups that distribute part of the rent equally among their members and the residual according to relative effort we show that in rent seeking societies applying the two polar sharing rules equilibrium never exists in the general case where groups apply different but not necessarily the polar sharing rules we study the relationship between group variability in distributing rents and the problem of non existence of equilibrium in the rent seeking game

model selection and misspecification in discrete choice welfare analysis this study extends the work by herriges and kling 1997 to further evaluate the impact of discrete choice modelling techniques on welfare measures particularly we evaluate the performance of the increasingly popular mixed logit model and the computational strategy for deriving discrete choice welfare measures our simulation results show that model misspecification can have profound effects on welfare measures in general the flexible mixed logit model performs relatively well in the presence of misspecification however when the nesting structure can be appropriately identified via statistical tests and a priori knowledge experience the nested logit model provides more reliable welfare measures than the mixed logit model

the intuition behind income effects of price changes in discrete choice models and a simple method for measuring the compensating variation small and rosen s econometrica 49 1 105 130 1981 method for measuring consumer surplus using discrete choice models has been widely adopted in public policy analysis for the case of a price change the present paper elucidates five theoretical assumptions inherent within small and rosen s measure and employs indifference maps to demonstrate that this measure is only applicable to the context of a single discrete choice free of non linear income effects the paper argues that where non linear income effects are present the aforementioned theoretical assumptions should be relaxed and the consumption context revised from discrete choice to discrete continuous demand furthermore the paper proposes a simple analytical method for approximating the expected hicksian compensating variation in the presence of non linear income effects and compares the empirical performance of this method against existing methods using data from morey et al am j agric econ 75 3 578 592 1993 as well as offering a simple approximation the proposed method yields insights on the potential range of the compensating variation depending on the extent of switching between choice alternatives and on the attribution of the compensating variation to the relevant choice alternatives

the state of the art of environmental valuation with discrete choice experiments abstract this paper provides with a review of the state of the art of environmental valuation with discrete choice experiments dces the growing body of literature on this field serves to emphasize the increasing role that dces are playing in environmental decision making in the last decade the paper attempts to cover the full process of undertaking a choice experiment including survey and experimental design econometric analysis of choice data and welfare analysis the research on this field is found to be intense although many challenges are put forward e g choice task complexity and cognitive effort experimental design preference and scale heterogeneity endogeneity or model uncertainty reviewing the state of the art of dces serves to draw attention to the main challenges that this methodological approach will need to overcome in the coming years and to identify the frontiers in discrete choice analysis

effects on welfare measures of alternative means of accounting for preference heterogeneity in recreational demand models multiattribute revealed preference data are used to investigate heterogeneity in a sample of kayakers for a panel of whitewater sites in ireland this article focuses on a comparison of preference heterogeneity using a random parameter logit model with correlated tastes and a latent class model in terms of the implications for welfare measures of environmental quality and site access changes recreationalists skill levels are found to affect preferences in both approaches statistics for the estimated distribution of welfare changes for the average respondent are computed for changes in site attributes but contrary to previous work these are found to be of similar magnitude

sampling and aggregation issues in random utility model estimation measurement of nonmarket values often involves subjective judgments since these judgments may influence results they should be carefully considered i focus on an aspect of subjective choice relating to the estimation of random utility models such models require specification of each recreationalist s choice set whether an individual perceives his choice set as composed of all possible alternatives a few popular alternatives or collections of spatially aggregated alternatives is an important judgment affecting the conclusions

risk aversion in rent seeking and rent augmenting games the effects of risk aversion are examined for two types of expenditures in rent seeking contests a rent seeking expenditures which improve the probability that the rent is obtained and b rent augmenting expenditures which increase the size of the rent to be awarded risk aversion is shown to reduce expenditures of type b unambiguously while having an indeterminate effect on those of type a these two contrasting results are shown to derive from the very different effects rent seeking and rent augmenting expenditures have on the riskiness of a player s position

the length of stay in the demand for tourism abstract one of the main characteristics of current tourism is the reduction in the length of stay at a destination nevertheless this variable has received little attention in literature this paper examines the microeconomic determinants of the length of stay at one of the mediterranean s leading sun and sand destinations the estimation of a conditional demand function model highlights the explanatory power of the tourist s sociodemographic profile and of holiday characteristics as well as the sensitivity of the length of stay to price changes

rent seeking with non identical sharing rules an equilibrium rescued nitzan s 1991 analysis of differential sharing rules in a collective rent seeking setting is reconsidered two groups each with more than one member are presumed to use different linear combinations of two sharing rules one based on an equal division of the prize and the other on each member s relative effort we show that an equilibrium always exists for this type of game and then characterize the equilibrium our result is contrary to nitzan s claims that a in the general case an equilibrium often does not exist and b an equilibrium never exists when the groups use the polar extreme rules

modeling overnight recreation trip choice application of a repeated nested multinomial logit model in this paper we apply the repeated nested multinomial logit model a version of a random utility model rum to estimate the choice of an overnight versus single day recreation trip along with the other usual choice of which of the sites to visit and less typically the choice of whether to participate in our application to fish at all we also find statistically significant income effects in the empirical results the application is to atlantic salmon fishing and the data set is for maine resident angler s fishing trips to rivers in maine and canada

brand choice and purchase frequency revisited an application to recreation behavior the role that total purchases play in determining the choice among brands has been considered in microeconomic theory for quite some time but for traditional goods only consumption of outdoor recreation is an unusual good most often measured using an individual s recreational trip adding the trips made on a number of choice occasions seems the obvious way to aggregate this good but doing so leads to several problems in defining a meaningful price index the hicks leontief conditions for aggregation suggest that trips to destinations may be thought of as brand choices on consumption occasions andthe continuous analogue to total purchases may in fact be the individual s total travel an empirical example of the model is used to estimate welfare impacts for a group of anglers

do rent seeking groups announce their sharing rules i introduction rent seeking can be seen all around us firms or coalitions of firms expend resources to influence government officials who have authority to award monopoly rights self interested pressure groups lobby for government subsidies foreign producers exert effort to avoid imposing tariffs or quotas on their products interest groups or lobbyists contribute to the election of politicians who promise to advance favorable legislation research and development rd then the groups announce their decisions simultaneously before choosing their sharing rules we examine the groups decisions on releasing sharing rule information their sharing rules and the effort levels and payoffs of the individual players in equilibrium we formally consider the following three stage game in the first stage each group decides and announces whether it will release to the rival group the information about its sharing rule which will be determined in the second stage in the second stage the players in each group jointly choose their sharing rule and then each group releases the information about its sharing rule if it decided to do so in the first stage in the third stage all the players in both groups choose their effort levels simultaneously and independently at the end of this third stage the winning player is chosen and the winner shares the prize with the other players in his group according to the sharing rule on which they agreed in the second stage solving the game we find the following first the case where both groups release their sharing rule information never occurs in equilibrium second the case where neither group releases its sharing rule information occurs only if the players are evenly matched third when the players are unevenly matched one group releases its sharing rule information and the other does not

effort levels in a cournot nash contest with asymmetric information abstract many contests exist where one player does not know his opponent s value of a fixed prize e g unobservable non market preferences for preservation this paper explores how changes in the nature of a one sided information asymmetry affect effort levels in a cournot nash contest the results indicate that the uninformed player s effort is an uncertain input such that his effort is inversely related to risk this reduces his average odds of success comparative static results are driven by the perceived odds of success and risk for the uninformed player and the actual odds of success for the informed player

inducing patterns of correlation and substitution in repeated logit models of recreation demand repeated logit models are among the most commonly applied methods for modeling seasonal recreation demand in this article we examine the capabilities of the repeated nested logit and repeated mixed logit models to capture patterns of error correlation and demand substitution particular attention is paid to the use of the mixed logit framework to generalize the strong assumptions on correlation patterns across sites and choice occasions imbedded in the nested logit model we examine the implications for the range of price elasticities allowed in both models based on the implied correlation structures copyright 2002 oxford university press

inefficiency as a strategic device in group contests against dominant opponents i introduction many strategic situations in economics and politics can be understood as contests rd nitzan and ueda 2009 a private good nitzan 1991a 1991b nitzan and ueda 2009 or a mixed good esteban and ray 2001 nitzan and ueda 2011 to a large extent the intensity of free riding or conversely the motivation for individuals to exert effort in a contest is shaped by the intra group incentive scheme or governance structure in standard contests incentives are inseparably linked to the sharing rule i e to the usually exogenous procedure by which the rents acquired in the contest are distributed within the group 1 in a number of economic applications however incentives to exert effort appear to be separate or are even willfully separated from the sharing rule phenomena such as team spirit akerlof and kranton 2005 identification with the group sherif 1966 bornstein and ben yossef 1994 peer pressure kandel and lazear 1992 or social norms to contribute to the social good elster 1989 are examples for this separation alternatively groups could apply selective incentive schemes based on relative performance lazear and rosen 1981 or marginally align individual and group incentives nitzan and ueda 2009 in all these scenarios individuals behave cooperatively i e in the interest of the entire group even if the final distribution of rents follows a standard sharing rule mechanisms to induce cooperation often are costly sanchez pages and straub 2010 may only work under restrictive conditions che and gale 2003 require strategic coordination among individuals hardin 1995 or cannot be ensured to be obeyed unanimously oliver 1980 this might explain why they do not emerge universally or automatically the point we make in this article is even stronger even if there existed perfect and costless solutions to within group free riding problems which will henceforth be called intra group efficient incentive schemes igeis they might not always be adopted why would a group for which an igeis is freely available not wish to utilize it but rather adopt an apparently inefficient governance structure by definition an igeis internalizes all within group externalities and seems to be a safe way to increase one s payoffs however this reasoning ignores repercussions that arise in strategic environments like contests suppose for example that the competing groups have sufficiently unequal strengths say due to unequal sizes or different comparative advantages then the weaker group may refrain from implementing a costless igeis to avoid the contest from heating up adoption of an igeis makes a group more efficient and consequently more aggressive in the contest on one hand higher efforts constitute a cost on the other they affect the share of the rent that this group can hope to acquire or the likelihood of succeeding in the contest 2 an igeis clearly enhances a group s prospects if the other group did not change its behavior however if members of the opponent group reply with a sufficiently strong increase in their contest efforts this diminishes and may potentially more than offset the gains from one s own increased efforts whether this happens depends on the direction of the strategic interaction between groups the detrimental firing back effect can only become relevant if the other group s efforts are sufficiently strong strategic complements to one s own efforts

narrow choice sets in a random utility model of recreation demand we consider the implications of narrow choice sets on welfare estimation in a random utility model of recreation demand we hypothesize that careful formulation of the choice set focusing on the sites of policy interest and their closest substitutes will give reasonably accurate welfare estimates we use nearby sites as close substitutes and treat more distant sites as aggregate alternatives in our application to fishing in maine we find that the welfare estimates are rather sensitive to narrowing choice sets in this manner the sensitivity largely tracts variation in the estimated travel cost coefficient across the different models considered

strategic groups and rent dissipation we consider a rent seeking contest in which players can form strategic groups before expending their outlays we examine the profitability of endogenous group formation and the effect of such group formation on rent dissipation we show the following when just one strategic group is formed in equilibrium group formation is beneficial both to the group members and to the nonmembers and rent dissipation is smaller than with usual individual rent seeking however when more than two strategic groups are formed in equilibrium group formation is never profitable to any players and rent dissipation is greater than with individual rent seeking jel