A censored random coefficients model for the detection of zero willingness to pay
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- Reichl, J. & Frühwirth-Schnatter, S. Quant Mark Econ (2012) 10: 259. doi:10.1007/s11129-011-9115-2
In this paper we address the problem of negative estimates of willingness to pay. We find that there exist a number of goods and services, especially in the fields of marketing and environmental valuation, for which only zero or positive WTP is meaningful. For the valuation of these goods an econometric model for the analysis of repeated dichotomous choice data is proposed. Our model restricts the domain of the estimates of WTP to strictly positive values, while also allowing for the detection of zero WTP. The model is tested on a simulated and a real data set.