Does Ignoring Multi-Destination Trips in TCM Cause a Systematic Bias?

Timo Kuosmanen, Eleonora Nillesen, Justus Wesseler

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The present paper demonstrates that treating multidestination trips (MDT) as single-destination trips does not involve any systematic upward or downward bias in consumer surplus (CS) estimates because the direct negative effect of a price increase (treating MDT as a single-destination trip) is offset by a shift in the estimated demand curve. Still, ignoring MDT can greatly underestimate or overestimate the CS. In addition, we demonstrate that there is a sound theoretical basis for using preference information for allocating travel costs between different sites included in the MDT package. A novel extreme value approach is proposed, which does not require any overly restrictive assumptions about consumer preferences. This approach is applied to the zonal travel cost model of the Bellenden Ker National Park, Australia. Parametric and non-parametric estimation techniques are used for calculating CS estimates, and the effects of different MDT treatments and estimation methods are compared.
Original languageEnglish
Pages (from-to)629-651
JournalAUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS
Volume48
Issue number4
DOIs
Publication statusPublished - 2004
MoE publication typeA1 Journal article-refereed

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