Individuals' Valuation of a Publicly Provided Private Good - Evidence from a Field Study

This paper assesses the Willingness to Pay (WTP) for a publicly provided bike sharing service whose costs are in large part covered by the municipality of Vienna, Austria. The following characteristics render it valuable for analyses: the possibility to free ride, a (perceived) positive externality of use, negligible income effects, perfect substitutability, and the credibility of valuation scenarios. We also address the disparity between Willingness to Accept (WTA) and WTP, and we find a mean WTP of EUR 1.2 for the bike sharing system and a disparity of 2:1 (WTA to WTP). Female participants as well as respondents who condition their valuation on those of others are willing to contribute more; and surprisingly those who actually use the bike sharing system as well as environmentally concerned respondents have a lower WTP. This Environmental Concern Paradox can be explained by an incorporation of positive externalities into individual valuation decisions.