Demand assessment and valuation
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Demand assessment and valuation book
Introduction In economics, an individual’s demand is generally deemed to be equivalent to his/her willingness (and ability) to pay (WTP) for a specific unit of a good or service. The concept of demand is theoretically simple; in practice, however, measuring demand poses a number of challenges. These challenges can be broadly grouped into three categories: 1) insufficient information on how WTP varies over a policy-relevant range of quantities; 2) an inability to observe demand in competitive markets for the good or service of interest, because markets are missing or highly distorted; and 3) the existence of external effects that cause deviations between private and social WTP.