Distance Effects in Consumption: Measuring Distance Value with Application to Casino Siting

Earl L. Grinols
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Earl L. Grinols: University of Illinois, Champaign, Illinois

The Review of Regional Studies, 1999, vol. 29, issue 1, 63-76

Abstract: Inferring the consumer benefits from reduced distance to the product or service provider plays a central role in the cost-benefit analysis of siting decisions, where the relevant issue is reducing the consumer's distance to the nearest supply point rather than reducing prices or the terms of supply. If visit enjoyment declines with distance, increases with expenditure per visit, and expenditure per visit and number of visits per period are choice variables, then a consumer-surplus-like measure serves as an upper bound on distance benefits. The theory is applied to a CES utility function modified to incorporate distance and benchmarked to casino data.

Date: 1999
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