Kuhn-Tucker Demand System Approaches to Non-Market Valuation

Abstract

In this chapter we summarize recent advances with Kuhn-Tucker demand system approaches to non-market valuation. Over the past five years, simulation-based estimation and welfare calculation strategies have been developed that enable the Kuhn-Tucker framework to address policy-relevant valuation questions in applications with many quality-differentiated goods. We review these modeling innovations in the context of three generic Kuhn-Tucker specifications that differ in terms of their ability to account for unobserved preference heterogeneity. For illustration, we apply the alternative specifications to Canadian moose hunting data and present parameter and welfare estimates. We conclude the chapter by suggesting important areas for future research within the Kuhn-Tucker framework.

Keywords