EXPERIMENTS ON THE DIFFERENCE BETWEEN WILLINGNESS-TO-PAY AND WILLINGNESS TO ACCEPT

''Willingness to pay'' (WTP) and ''willingness to accept'' (WTA) measu res of welfare change have been found to differ substantially when eli cited from surveys or experimental market transactions. Conventional e conomic theory suggests that the difference between WTP and WTA should be smaller than those observed in empirical tests. This study focuses on the hypothesis that the availability of substitutes for the good b eing evaluated affects the difference between the two measures. The re sults suggest that the existence of a substitute does reduce the diffe rence between WTP and WTA, however, the difference between these two m easures is significant with or without substitutes.