Activities in Models of Recreational Demand

Abstract

Economists have taken divergent approaches to incorporating on-site activities into their empirical specifications of site choice models. We develop a model that explicitly allows individuals to choose both on-site attributes and site activities. This model not only conditions the marginal value of site attributes on the choice of an activity, but also explicitly recovers the marginal rates of substitution across activities. This approach reduces biases in the welfare analysis of changes in site attributes when preferences for attributes depend upon the choice of activities undertaken at the site. We test hypotheses generated by our model by comparing rival models of demand for access to beaches in Costa Rica. (JEL D1, Q2)