International Handbook on the Economics of Mega Sporting Events
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International Handbook on the Economics of Mega Sporting Events

Edited by Wolfgang Maennig and Andrew Zimbalist

From the Olympics to the World Cup, mega sporting events are a source of enjoyment for tens of thousands of people, but can also be a source of intense debate and controversy. This insightful Handbook addresses a number of central questions, including: How are host cities selected and under what economic conditions? How are these events organized, and how is local resistance overcome? Based on historical and empirical experience, what are the pitfalls for the organizers of these events? What are the potential economic benefits, including any international image effects? How can the costs be minimized and the benefits maximized for host cities and countries? How do these mega events impact the challenges of globalization and what is their environmental legacy?
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Chapter 14: The Econometric Analysis of Willingness to Pay for Intangibles with Experience Good Character

Bernd Süssmuth


Bernd Süssmuth 1 INTRODUCTION This chapter gives a practitioner’s primer of statistic and econometric techniques and their welfare economic foundations as they relate to assessing the intangible value of hosting a mega sporting event. Recently, a young body of literature, using techniques emanating from cultural and environmental economics and marketing science, is concerned with the quantification of intangible economic ramifications of the notoriously and in major parts publicly subsidized hosting of mega sporting events (see eftec, 2005; Barros, 2006; Atkinson et al., 2008; Barget and Gouguet, 2010; Süssmuth et al., 2010). These studies apply in different forms and for different events what has become known as the contingent valuation method (CVM) which assesses positive externalities of the mere hosting of the respective event which are not directly internalized by the market by quantifying the corresponding willingness to pay (WTP) of the concerned taxpayers (Arrow et al., 1993). Besides using CVM as the central technique to survey stated preferences, we also briefly sketch a methodology known as discrete choice or choice-based conjoint analysis and other alternative methods. Hosting a mega sporting event such as Olympics, the FIFA World Cup, the UEFA Euro, or the Commonwealth Games has the notion of an experience good. An experience good is a good for which consumers cannot assess its value in advance but only upon consumption or from past experience (Nelson, 1970; Ungern-Sternberg and von Weizsäcker, 1985; van der Ploeg, 2002). By this defining characteristic, the assessment and analysis of the value...

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