To regulate congestion with prices: an application of a repeated random utility model to outdoor recreation

Abstract : In France open access is the rule for recreational areas. This generally leads to suboptimal equilibrium of visitation due to congestion externality. Furthermore, congestion is a result of a Nash equilibrium. This assumption needs to be taken into account in econometric estimations and in welfare calculations. In our work, we explore some ways of regulating congestion by prices. Repeated random utility models are estimated on data about the visitation of 43 coastal sites from west France, using a procedure which ensures the consistency with the Nash equilibrium. Taxing only one site reduces the collective welfare because of substitution effects, whereas global taxation manages to maximise welfare due to participation reduction.