Optimally Locating a National Public Facility: An Empirical Application of Consumer Surplus Theory

Abstract

This paper provides an empirical framework for testing a welfare change measure by considering the following problem: a public agency is faced with the decision of how to maximize public welfare from optimally locating a large-scale national recreational facility. Using a case study of the National Air Museum in Dayton, Ohio, the travel cost method is employed to measure: (1) the national welfare from the existing recreation site; and (2) the gain in welfare associated with constructing a substitute facility at a location of the agency's choice. Findings suggest that if site visitation data can be found which exhibits significant price and visitation variation, a site demand function can be efficiently estimated, providing the basis for national welfare measurement from alternative site locations. Findings also suggest significant equity implications of a national site location decision.