Table 8 also shows gate revenues. As discussed in Section 3.2, we project the level of gate revenues
based on households’ maximum WTP for the NRP (i.e., the most households should be willing to pay for
the NRP is the amount they expect to spend at the gate). At low NRP prices, gate revenues are relatively
low and consist primarily of households that are unaware of the pass program and thus pay at the gate.12
As the NRP price goes up, gate revenues increase as households with a maximum WTP less than the pass
price choose instead to pay at the gate. Gate revenues flatten out at their maximum level once the NRP
price reaches about $150 for the RDD sample and about $200 for the NPF sample. At these higher-end
prices, there are few predicted NRP purchasers remaining.
6.2.3 Revenue Neutrality
Recall from the Introduction that the selected NRP price must be “fair and revenue neutral”. Revenue
neutrality implies that the price of the NRP should not result in substantial revenue losses relative to the
revenue that would be received absent the ability to purchase an annual pass. The revenue losses from
pricing the NRP are straightforward to calculate. The revenues absent the pass are given by the gate
revenues at the bottom of the table (i.e., at a sufficiently high price that no households purchase the pass).
The $252 and $2.8 million revenues for the RDD and NPF samples can then be compared to the total
NRP plus gate revenues at lower NRP prices. The results in Table 8 suggest that the price may need to be
set well above the recent GEP price of $65 to avoid sacrificing substantial revenues. As the NRP price
increases, we approach “revenue neutrality” near a price of about $150 for the RDD sample and $200 for
the NPF sample. We note $125 is the cost of an annual pass for California’s state parks and $140 is the
approximate price (in U.S. dollars) of an annual pass for Parks Canada.
pass for free (67 households in the RDD sample and 30 in the NPF sample), are treated as protest bidders and are
omitted from the analysis.
12 Projected gate revenues are based on the assumption that the fraction of unaware households in the population
does not vary with the NRP price. We recognize that this assumption is questionable at low NRP prices (i.e., word
is likely to spread fast if the NRP price is set at or near zero). These low prices, however, are also likely to be
outside the practical range for public policy, and little or no attention need be given to the extremes of any of the
revenue functions.
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