Pricing for Efficiency and Revenue in Public Recreation Areas

Abstract

Microeconomic theory is used to consider issues related to setting a price for the use of publicly provided outdoor recreation. The necessary conditions for pricing recreation to achieve economic efficiency are that the marginal cost of recreation use be greater than zero and the costs of charging fees not be excessive. Marginal costs arise from three sources: (1) overcrowding, (2) ecological damage, and (3) operating expenses. Alternative pricing systems and their application to specific recreation activities are discussed. Limiting recreation use by pricing is more economically efficient than other rationing schemes.