The Demand for Land Information System Services: A Theoretical Framework
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A comparative statics analysis shows that a compensated demand for LIS services exists. The theoretically correct welfare measure under certainty, the Hickstan compensating variation, is appropriate to the willingness to pay for land information. The value of this information is proportional to the utility of the land-related amenity whose amount is uncertain and the increment in the probability of a desirable outcome owing to the information signal ex ante. The effect of initial uncertainty upon information demand is ambiguous, but information demand is strictly an increasing function of the perceived accuracy of the LIS.