Should I stay or should I go?: Weather forecasts and the economics of short breaks

Lorenzo Zirulia

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: The aim of this paper is to model the decisions of tourists and a monopolist firm when weather forecasts are available. Before deciding whether to go on holiday or not, but after the firm has decided and posted its price, tourists can look at weather forecasts. Our results show that the price chosen by the firm and the corresponding equilibrium profit are decreasing as a function of the accuracy of weather forecasts. Consumers, instead, are better off the more accurate weather forecasts become. Managerial and policy implications are also derived.

JEL-codes: D83 L12 L83 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-for
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp1034

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