We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Resolving Differences Essay Sample

essay
The whole doc is available only for registered users OPEN DOC
  • Pages:
  • Word count: 325
  • Category: economic

Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

Resolving Differences Essay Sample

The article “Resolving Differences in Willingness to Pay and Willingness to Accept” tests the hypothesis that differences in willingness either to pay (WTP) or to accept (WTA) are due to substitution between the goods. Firstly, the authors describe general experimental design stating that Hanemann’s model is the best appropriate for measuring divergence. Then the article proceeds to outlining main procedures and obtained results. The authors also pay attention to establishing relations between endowment effect and substitution effect. Finally, the authors draw relevant conclusions summing up main points addressed.

It is necessary to outline that the problem addressed by authors is divergence between in measuring WTP and WTA. Actually, it is noted that this divergence troubled and is troubling many economists nowadays. Hanemann provides relevant explanation based on economic theory that divergence is simply “cognitive mistake”. After the experimental procedures the authors have proved that divergence between WTP and WTA is driven by the degree of substitutability between goods. It is stated that for market goods WTA and WTP value measures converge, whereas for non-market goods the value is diverge even with full information about the products. The authors admit that “defining an individual-specific index of substitution for the non-market good could improve the correspondence between economic theory and observed phenomenon”.

It is necessary to agree with many claims posted by authors. For example, Hanemann models to be appropriate for measuring divergence. The authors claim that realizing substitution effect is more significant now and therefore, divergence depends on the degree of substitutability. If the products are substitutable, the vale measures for WTA and WTP converge. Consequently, the less substitutability between goods, the higher the divergence is. Therefore, it is found in the article that for two market goods having close substitute the divergence disappears.

References
Shogren, J., Shin, S.Y., Hayes D. J., & Kliebenstein J.B. (1994, March). Resolving Differences in Willingness to Pay and Willingness to Accept. The American Economic Review, 256-270.

We can write a custom essay

According to Your Specific Requirements

Order an essay

You May Also Find These Documents Helpful

Political and economic matters

Between the years of 1820 and 1848, there were several preeminent political and economic matters that had modified the American society. During this time, President Andrew Jackson was in office, and his term was well-known as the Jacksonian era. More so because it had lead to better democracy by the increase in political reforms and improvements. This had influenced principles or goals of the American...

IKEA marketing strategy

Operational process: As a multinational corporation, IKEA adopts a strategy that varies from their competitors with the sole aim of achieving a sustainable competitive advantage. The operation strategy of IKEA emphasizes of its mission of creating furniture with top-notch quality and durability at affordable prices for its consumers. IKEA founder, Ingvar Kamprad saw that most people have a simple lifestyle and live economically because people...

Economic Outlook for the Region

A prime mover is someone who has responsibilities or control over a business in order to execute a plan. Three pros that explains this in relation to CARICOM will be; 1. One of the benefits that CARICOM members got from this was being able to trade free within regions from the year 1974 when they initiated it. They removed all barriers to help this decision be...

Economic and social outlook

Millions of people are living in extreme poverty, in many cases they are denied access to proper services, energy, water, health, and above all the opportunities to improve their economic and social outlook. There is always the question of who is poor and how do we describe poverty? According to Bunting, the poor are those who struggles or barely survive with total lack of necessities...

Economic reconstruction of African post-conflict states

Aware of the fact that practically three-quarters of African states are affected by war or have war going on presently, Noting that the GDP per capita(PPP) of more than half of the African states is below 5000, Keeping in mind the successful structures and policies of the Marshall Plan of 1948 implemented in war-ravaged European countries, Further keeping in mind the Agenda 2063 proclaimed by the African Union(AU)...

Get Access To The Full Essay
icon
300+
Materials Daily
icon
100,000+ Subjects
2000+ Topics
icon
Free Plagiarism
Checker
icon
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access
immediately?

Become a member

Your Answer Is Very Helpful For Us
Thank You A Lot!

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?

Couldn't Find What You Looking For?

Get access to our huge knowledge base which is continuously updated

Next Update Will Be About:
14 : 59 : 59
Become a Member