Golf course market analysis: Structural hedonic demand and supply estimates

The underlying economic fundamentals of golf are, at best, not well understood. This dissertation attempts to shed some light on golf and golf courses in the United States. The analysis uses the GOLF MAGAZINE Golf Course Guide that contains over 100 variables on more than 17,000 courses in the United States and Canada for the years 1995 through 1997. The data chapter reports over one hundred pages of golf course statistics including numerous figures and tables. A literature review summarizes a selection of hedonic pricing literature and reports how certain hedonic methods can be applied to the analysis of golf courses. Other influential work in sports economics and the golf industry are reviewed. The model chapter reports the first estimates of quality-adjusted demand and supply equations following Rosen (1974). This is done in two stages. In the first stage, quality-adjusted prices for golf are calculated using standard hedonic estimation techniques. Next, the quality-adjusted greens fee prices are used as endogenous variables, along with exogenous shift variables, to simultaneously estimate demand and supply equations for golf. The hedonic demand and supply equations are estimated in levels and logs using two stage least squares and iterative three stage least squares. The estimates are nearly all significant and follow prescribed economic theory. This paper is also the first to estimate demand and supply price elasticities for golf.