Proceedings of the Eighteenth Biennial Conference of the International Institute of Fisheries Economics and Trade, held July 11-15, 2016 at Aberdeen Exhibition and Conference Center (AECC), Aberdeen, Scotland, UK.
Suggested Bibliographic Reference: Challenging New Frontiers in the Global Seafood Sector: Proceedings of the Eighteenth Biennial Conference of the International Institute of Fisheries Economics and Trade, July 11-15, 2016. Compiled by Stefani J. Evers and Ann L. Shriver. International Institute of Fisheries Economics and Trade (IIFET), Corvallis, 2016.
Choices are often limited as the most popular alternatives reach capacity and sell out; thereafter, selection is over less preferred choices. In the context of nonmarket goods, willingness to pay (WTP) welfare measures provide an estimate of the value of characteristics – often calculated through the modeling of preferences using a random utility model (RUM) framework. RUM preference parameter estimation is based on the choice attributes and the observed choices consumers make from a set of options. Such models are estimated under the implicit assumption that all options are available to all consumers. If choices can “sell out,” the properly specified choice model would drop unavailable alternatives from the set of options; however, actual availability is almost never observed at the individual consumer level. Ignoring capacity constraints can result in biased parameter and WTP estimates. A solution to this problem that can be implemented using only aggregate level data is provided. We provide an empirical application of modeling vessel choice in the recreational overnight fishing trip market in San Diego – where particular boats are often sold out. We find the estimates for WTP for proportion of highly migratory species fish catch on these trips increase when we account for sellouts. Since RUM models are often used in fishery management decisions, not accounting for sellouts may lead to an undervaluation of important fishery resources.