Working Papers, Swedish National Road & Transport Research Institute (VTI)
No 2006:7:
Willingness to Pay for Car Safety: Evidence from Sweden
Henrik Andersson ()
Abstract: This study estimates a marginal willingness to pay (WTP)
function for a road-mortality risk reduction. Observed marginal WTP from
the Swedish car market is used and found to be positively correlated with
the baseline risk of the cars. Among owner attributes, we find that income
increases marginal WTP, whereas background risk reduces marginal WTP. Also,
when comparing the estimated monetary value of a non-marginal risk
reduction derived from the integral of the marginal WTP-function with an
estimate based on marginal WTP, we find that the estimates are different
and that the difference is 15-25 percent for larger estimates, but
negligible for smaller risk reductions (which is in line with
expectations).
Keywords: car safety; hedonic prices; non-marginal willingness to pay; background risk; (follow links to similar papers)
JEL-Codes: C51; D61; J28; (follow links to similar papers)
22 pages, September 20, 2006
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- This paper is published as:
-
Andersson, Henrik, (2008), 'Willingness to Pay for Car Safety: Evidence from Sweden', Environmental and Resource Economics, Vol. 41, No. 4, pages 579-594
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