Consumer welfare and unobserved heterogeneity in discrete choice models : the value of alpine road tunnels


Cerquera, Daniel ; Ullrich, Hannes


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URL: http://ub-madoc.bib.uni-mannheim.de/3095
URN: urn:nbn:de:bsz:180-madoc-30956
Document Type: Working paper
Year of publication: 2010
The title of a journal, publication series: None
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: R41 C14 C35 L91 H54 ,
Subject headings (SWD): Italien , Frankreich , Straßengüterverkehr , Transit , Alpen , Konsumentenrente , Diskrete Entscheidung , Kosten-Nutzen-Analyse
Keywords (English): Discrete choice , consumer surplus , nonparametric estimation , transalpine freight
Abstract: We investigate the sensitivity of consumer surplus estimates to parametric assumptions on individual preference heterogeneity in a discrete choice framework. We compare results from a parametric random coefficients logit model and a recently proposed nonparametric sieve estimator. In particular, we provide an assessment of the direct economic value of crossing the Alps for the European road freight sector. Using revealed preference data from a detailed survey on transalpine road freight traffic, we estimate the yearly cost of closing the Mont-Blanc Tunnel, which was closed for 3 years following a large accident in early 1999. Ultimately, our results permit the economic evaluation of security and transport policy measures affecting transalpine traffic. Our findings suggest that the way we model unobserved heterogeneity significantly affects our welfare results.
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