Collective-Consumption Services of Individual-Consumption Goods: Comment

Long, Millard F.

doi:10.2307/1879595

Cited by 17 publications

(6 citation statements)

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“…Millard Long (1967) asserted that option price is nothing more than the expected value of surplus or $65 in our example. Cotton Lindsay (1969) disagreed and Charles J.…”

Section: Introductionmentioning

confidence: 83%

Cost-Benefit Analysis Under Uncertainty

Graham¹

1977

128

118

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“…Millard Long (1967) asserted that option price is nothing more than the expected value of surplus or $65 in our example. Cotton Lindsay (1969) disagreed and Charles J.…”

Section: Introductionmentioning

confidence: 83%

Cost-Benefit Analysis Under Uncertainty

Graham¹

1977

128

118

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“…Thirdly, the commodity is characterized by incomplete excludability and storability. Critics claimed that option valuation would double count the consumer surplus (Long, 1967), but Lindsay (1969) refuted this criticism and emphasized that uncertainty is the key to understand OV. In this paper, the OV is defined as the value of the "option of consuming [a] good at some point in the future, even if [the individual] may never actually take up that option" (Laird et al, 2009, p. 174).…”

Section: Theoretical Originsmentioning

confidence: 99%

Accessibility and uncertainty: An empirical analysis of option value in transport

Bondemark¹,

Johansson

Kopsch

2021

JTLU

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Are there option values for transport services? A few studies have tried to answer this question through various stated preference methods, but we do not know much about its magnitude in different contexts. In this paper, we summarize the theory on option value, present previous empirical work concerning transport, and discuss its links to accessibility. Accessibility can be seen as the end product of the transport system, and the argument we pursue is that option value is a component of accessibility. Therefore, estimations of the option value ought to be connected to the marginal accessibility change of an optional transport mode. The concept of substitutability has the potential to meet this criterion. It is the degree to which an alternative trip can replace an initially preferred trip, or, put differently, how accessibility at a location is composed. We conduct an empirical application to test whether the variation in housing transaction prices is associated with substitutability. We find that housing prices are higher where the accessibility is built up by several transport modes, given any level of total accessibility. We interpret this as households, on average, are willing to pay a risk premium to keep optional transport modes available.

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“…The quest for a theoretical toundation for option value, and a linkage with other economic values, stimulated a sequence of papers in the literature spanning more than two decades (Weisbrod 1964, Long 1967, Lindsay 1969, Byerlee 1971, Cicchetti and Freeman 1971, Schmalensee 1972, Anderson 1981, Bishop 1982, Smith 1983, 1985, Freeman 1984, 1985, Plummet 1986, Hartman and Plummer 1987, Wilman 1987. Following Weisbrod's intuitive description, Cicchetti and Freeman (1971) based the first theoretical exposition of OV on demand uncertainty.…”

Section: Option Valuementioning

confidence: 99%

Magnitude and distribution of option value for the Washakie Wilderness, northwest Wyoming, USA

Barrick

Beazley

1990

Environmental Management

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/ Option value is estimated for the Washakie Wilderness, northwest Wyoming, USA, using the contingent valuation technique. Consumer surplus, the traditional measure of economic value, is estimated separately and compared with option value. Several populations are tested, including Washakie visitors, Yellowstone National Park visitors, and residents from four metropolitan test markets: Salt Lake City, Utah; Portland, Oregon; Nashville, Tennessee; and Orlando, Florida, USA. The average annual preservation option value (consumer surplus) expressed by on-site wilderness visitors is $46.17 ($80.13), by urban residents is $9.70 ($8.97), and by rural residents is $8.43 ($7.80). Four selected attributes are determined to be important in motivating option demand for the Washakie, including existence value, bequest value, the desire for an on-site visit, and interest in securing the visiting privileges of others. The results suggest that option value is important in wilderness valuation and that off-site users account for a large part of the economic value of wilderness.Advancing technology increases the pressure to remove natural resources from remote lands by expanding the resource base and reducing extraction costs. A classic valuation asymmetry arises when development encroaches upon public lands valued in the natural state, like wilderness, parks, and critical wildlife habitat. The value of land in forestry, agriculture, or mineral extraction is easily obtained, but establishing the intangible value of the natural world is not so straightforward (Krutilla and Fisher 1975). The services of the natural state are rarely marketed; nor can the problem be solved by creating markets. The collective-consumption aspect of amenity resources dictates that markets would be inefficient. The valuation asymmetry often results in biased land allocation decisions: the intangible value of the natural environment is ignored, or assumed to be small, when compared with the more readily marketed commodities that can be extracted from it. Without an anchor for the nonmarket side, the decision-making process is free to drift toward special interests. Moreover, without reasonable value estimates for wild environments, it is impossible to know if irreversible allocations to other uses are correct or not.Consumer surplus captures the traditional non-

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Collective-Consumption Services of Individual-Consumption Goods: Comment

Cited by 17 publications

References 0 publications

Cost-Benefit Analysis Under Uncertainty

Cost-Benefit Analysis Under Uncertainty

Accessibility and uncertainty: An empirical analysis of option value in transport

Magnitude and distribution of option value for the Washakie Wilderness, northwest Wyoming, USA

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