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Title: Notching for Free: Do Cyclists Reveal the Value of Time?

Citation Type: Working Paper

Publication Year: 2017

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Abstract: We explore a nonlinear, “notched” pricing structure in a novel market—urban bikesharing—to identify how inframarginal price changes affect consumer behavior. By observing cyclists extending their trips to avoid a discontinuous price increase, we are able to estimate a time-for-money trade-off directly for both commuting and recreational trips. Although our estimation strategy reveals an estimate of consumers’ opportunity cost of time under neoclassical assumptions, we find that a 400% price increase does not affect behavior in a meaningful way. This result suggests consumers respond more strongly to quantity signals, which has direct implications for nonlinear pricing in other settings.

Url: http://www.rff.org/files/document/file/RFF WP-17-17.pdf

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Authors: Wichman, Casey, J; Cunningham, Brandon

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Publication Number: 17-17

Institution: Resources for the Future

Pages: 55

Publisher Location: Washington, D.C.

Data Collections: IPUMS USA

Topics: Other

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