Quantitative Marketing and Economics

, Volume 10, Issue 2, pp 259–281

A censored random coefficients model for the detection of zero willingness to pay

Article

DOI: 10.1007/s11129-011-9115-2

Cite this article as:
Reichl, J. & Frühwirth-Schnatter, S. Quant Mark Econ (2012) 10: 259. doi:10.1007/s11129-011-9115-2

Abstract

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.

Keywords

Willingness to pay Censored random coefficients Bayesian inference 

JEL Classification

C11 Q51 

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Energy Institute at the Johannes Kepler University LinzLinzAustria
  2. 2.Institute for Statistics and MathematicsVienna University of Economics and BusinessViennaAustria

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