Using a Control Function to Resolve the Travel Cost Endogeneity Problem in Recreation Demand Models

Richard Melstrom and Frank Lupi

No 149732, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: This paper proposes using a control function to correct for endogeneity in recreation demand models. The control function approach is contrasted with the method of alternative specific constants (ASCs), which has been promoted in prior research. As an application, we consider the case of travel cost endogeneity in the demand for Great Lakes recreational fishing. Using data on Michigan anglers, we employ a random utility model of site choice. We show that either ASCs or the control function will correct for travel cost endogeneity, although we find that the model with ASCs produces significantly weaker results. Overall, compared with traditional approaches control functions may offer a more flexible means to eliminate endogeneity in recreation demand models.

Keywords: Environmental Economics and Policy; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 2
Date: 2013
New Economics Papers: this item is included in nep-dcm, nep-env, nep-tre, nep-tur and nep-upt
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https://ageconsearch.umn.edu/record/149732/files/Melstrom_AAEA_poster.pdf (application/pdf)

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Working Paper: Using a Control Function to Resolve the Travel Cost Endogeneity Problem in Recreation Demand Models (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:149732

DOI: 10.22004/ag.econ.149732

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