| Abstract: | All-or-nothing demands and start-up costs for nonmarket goods are discussed within the framework of price discrimination models. We show that in an all-or-nothing bid situation, consumers will provide average rather than marginal values resulting in overstatement of consumers' surplus. Nonmarket goods are often provided under conditions which are exacerbated by start-up costs. Empirical measurement of nonmarket demand can contain significant error if these concepts are not properly applied. |
