Experiments on the Difference between Willingness to Pay and Willingness to Accept

"Willingness to pay" (WTP) and "willingness to accept" (WTA) measures of welfare change have been found to differ substantially when elicited from surveys or experimental market transactions. Conventional economic theory suggests that the difference between WTP and WTA should be smaller than those observed in empirical tests. This study focuses on the hypothesis that the availability of substitutes for the good being evaluated affects the difference between the two measures. The results suggest that the existence of a substitute does reduce the difference between WTP and WTA, however, the difference between these two measures is significant with or without substitutes.