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The endowment effect and WTA: a quasi-experimental testAuthor(s): H.F. MacDonald; J. Michael Bowker
Source: J. Agr. and Applied Econ., Vol. 26(2): 545-551
Publication Series: Miscellaneous Publication
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DescriptionThis paper reports a test of the endowment effect in an economic analysis of localized air pollution. Regression techniques are used to test the significance of perceived property rights on household WTP for improved air quality versus WTA compensation to forgo an improvement in air quality. Our experimental contributes to the research into WTP/WTA divergence by providing a new basis for supporting the existence of an endowment effect. Our results are in contrast to recent work by shogren et al. which supports the substitution proposition of Hanemann while rejecting the endowment effect.
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CitationMacDonald, H.F.; Bowker, J. Michael. 1993. The endowment effect and WTA: a quasi-experimental test. J. Agr. and Applied Econ., Vol. 26(2): 545-551
Keywordscontingent valuation, endowment effect, property rights, substitution effect
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