16
the program was implemented under two alternative assumptions for pr . Specifically, we
first instructed respondents to hold pr at the same level as the current cost of the trip, and
then we asked them to consider a new cost of the trip, this new cost being equal to
(pr × 1.2) (i.e., a 20% increase).
This means that we have a total of three observations on trips for each respondent.
The first is the actual number of trips to the site in the last year, while the second and the
third are the number of trips the respondent says he would take if the program is
implemented, assuming no change, and a 20% increase, respectively, in the cost of the
trip. This design is summarized in table 5. The quality of the site, q, is here the state of
conservation of the monument and additional amenities or services offered by the
hypothetical public program.
Table 5. Scenarios used in the questionnaire.
Scenario |
Nature of the |
Price |
Quality |
1 |
Actual |
pr (actual cost of the |
Current conditions |
2 |
Hypothetical |
____________pr____________ |
_____Improved_____ |
____________3____________ |
Hypothetical |
_________1.2× pr________ |
_____Improved_____ |
Equation (4) means that as the quality of the site is improved through the program, the
demand function shifts out, implying that for all trip prices people will take more trips.
The increase in expected trips is r* ∙ β3 ∙ Δq , where Δq is the quality change. The
percentage change in expected trips is thus β3 ∙ Δq.
B. Welfare Measures
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