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Stéphan Marette, Jayson L. Lusk and Jutta Roosen
''Welfare Impact of Information with Experiments: The Crucial Role of the Price Elasticity of Demand''
( 2010, Vol. 30 No.2 )
This paper focuses on the welfare effects of information computed from experimental methods eliciting willingness-to-pay. First, a theoretical model shows that the size of the welfare variation is related to the elasticity of the demand under the absence of information about a characteristic. Second, our estimates indicate that consumer demand from a laboratory auction is more price-elastic than time-series demand for similar products. As a result, the welfare change directly derived from individual willingness-to-pay is overestimated compared to the welfare change linked to an approach combining time-series demand with the mean willingness-to-pay premium.
Keywords: Experiment, Welfare, Consumers, Information, Demand
JEL: C9 - Design of Experiments: General
Q1 - Agriculture: General
Manuscript Received : Apr 03 2010 Manuscript Accepted : May 27 2010

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