The effect of nesting structure specification on welfare estimation in a random utility model of recreation demand: An application to the demand for recreational fishing

Nested legit has become common in estimating random utility models of recre ation demand. Because welfare analysis is often the objective of estimating these models, it seems natural to ask, what effect does the choice of nest ing structure have on the welfare estimates generated by these models? Ther efore, we compare the results of nine nesting structures and find that the variation in welfare estimates across the models is not large. Our results are contrary to those of Kling and Thomson and Shaw and Ozog. The differenc e appears to originate with differences in the estimated dissimilarity coef ficients in the nested models.