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Financial Implications of Seasonal Variability in Demand for Tourism Services (Final Draft)

Clement Tisdell

No 244574, Economic Theory, Applications and Issues Working Papers from University of Queensland, School of Economics

Abstract: Using Jensen’s inequality (and its mathematical generalization), this contribution shows how increased seasonal (periodic) variability of demand for tourism services can increase the annual profit of a tourism enterprise and the producers’ surplus of a corresponding competitive segment of the tourism industry experiencing this increased variability. It identifies conditions which result in these effects being magnified and takes account of the fact that a tourism business’ supply of services is often subject to capacity utilization constraints. A novel feature is that allowance is made for the possibility that variations in the market demand for tourism services may alter the prices of factors of production. Examples of seasonal variability in the prices for tourism services are provided. Furthermore, the importance of this contribution is related to the available scholarly literature about the financial consequences of seasonal variability in the demand for tourism services.

Keywords: Demand and Price Analysis; Institutional and Behavioral Economics; Labor and Human Capital; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 19
Date: 2016-09
New Economics Papers: this item is included in nep-tur
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uqseet:244574

DOI: 10.22004/ag.econ.244574

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