Journal or Book Title
Review of Economics and Statistics
First Page or Article ID Number
The Kuhn-Tucker model of Wales and Woodland (1983) provides a utility theoretic framework for estimating preferences over commodities for which individuals choose not to consume one or more of the goods. Due to the complexity of the model, however, there have been few applications in the literature and little attention has been paid to the problems of welfare analysis within the Kuhn-Tucker framework. This paper provides an application of the model to the problem of recreation demand. In addition, we develop and apply a methodology for estimating compensating variation, relying on Monte Carlo integration to derive expected welfare changes.
Phaneuf, Daniel J.; Kling, Catherine L.; and Herriges, Joseph A., "Estimation and Welfare Calculation in a Generalized Corner Solution Model with an Application to Recreation Demand" (2000). Economics Publications. 17.