THE MEASUREMENT OF WILLINGNESS‐TO‐PAY FOR MIXED GOODS*
| Published date | 01 November 1984 |
| DOI | http://doi.org/10.1111/j.1468-0084.1984.mp46004001.x |
| Author | C. D. Throsby |
| Date | 01 November 1984 |
OXFORD BULLETIN
of
ECONOMICS and STATISTICS
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 46, 4 (1984)
0305-9049 S3.00
THE MEASUREMENT OF WILLINGNESS-TO-
PAY FOR MIXED GOODS*
C. D. Throsby
I. INTRODUCTION
The 'willingness-to-pay' method for evaluating demand for public goods
has now become well-established as an alternative to the hedonic price
technique (Rosen, 1974) when the latter is inappropriate or when satis-
factory data are not available. The willingness-to-pay method seeks to
establish individual demand prices for the good in question by experi-
mental or survey techniques. 1 Early fears, stemming from Samuelson's
original exposition (1954), that this approach would be vitiated by the
free-rider problem, have been diminished to some extent by recent
suggestions that this problem is not as serious as first thought (e.g.
Brubaker, 1975; Johansen, 1977), or that satisfactory means can be
devised to control for strategic bias in preference revelation (e.g. Bohm,
1972; Green and Laffont, 1979).
Willingness-to-pay techniques have been used to measure demand for
pure public goods such as environmental quality (e.g. Randall et al.,
1974; Rowe et al., 1980). But a question remains as to the applicability
of these methods to the demand for the public-good component of the
output of mixed goods. This important class of goods, lying between
the 'polar' cases of pure private and pure public commodities, coin-
prises those goods that yield both private and public characteristics as
distinct joint products in their output. Examples include education and
health services, national parks, urban renewal programmes, theatres,
museums and galleries. Formally, the public-good output of these
mixed goods is identical to a positive externality. However, in demand
With the usual caveat, I express my gratitude to Alan Brown and Ken Mayhew for helpful
comments on a draft of this paper.
For an empirical comparison of survey and hedonic approaches in valuing public goods.
see Brookshire et al. (1982).
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