5-page paper on econ

Economics 382 A Possible Final Project

The following information was true in 1999; for the purposes of this project, you may assume it is still true today.

The city of Seattle owns three municipal golf courses: Jackson, Jefferson, and West Seattle. They are managed by a nonprofit organization called Municipal Golf of Seattle (MGS). Unlike most other public golf courses in the greater Seattle metropolitan area, until very recently, MGS chose not to use seasonal rates (i.e., lower greens fees in the winter months). Consequently, although the three MGS courses had slightly lower green fee schedules than the average in the area during the summer months, that price differential essentially vanished in the winter as other courses lowered their fees. Among the questions you are to address in the paper you draft for this project, is whether MGS should be altering its green fee structure, particularly during the winter months. To answer the question, estimate a residual demand function for public golf in the Seattle area using the EViews data set called golfdata.wf1 found on the class web site. If appropriate, consider estimating a residual (course-level) demand curve that allows for the elasticity of demand at the three MGS courses to be different than the elasticity at all other courses (by judiciously employing appropriate dummy variables). In the process of estimating residual demand, determine whether the elasticity of demand is seasonal in nature.

The panel (cross-section/time series) data set includes information on the number of rounds of golf played at 22 area public courses during the 12 months of 1998. The data set is arranged by course number. Among the variables available to you to explain residual demand (i.e., the dependent variable is ROUNDS) are average monthly green fees, average fees for the 21 substitute courses, monthly rainfall and temperature, and several variables describing course-specific characteristics (e.g., yardage, minimum distance to either downtown Seattle or Bellevue, rating, slope, etc.).

In addition to providing consulting advice to MGS regarding green fees, also consider the question of capital improvements. Only Jefferson currently has a driving range (Jackson and West Seattle do not). None of the three MGS courses has paved cart paths. This fact may reduce play at these courses during the winter months because course managers are reluctant to rent carts when the courses are muddy. MGS would like to increase play at its courses. Should it fund the paving of cart paths or the building of driving ranges first (as far as the goal of increasing play is concerned)?