Private and public incentive to reduce seasonality: A theoretical model

Roberto Cellini and Giuseppe Rizzo

No 2012-16, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper presents a theoretical model to investigate the incentive of private producer and policymaker to reduce seasonality in a given market, where consumers derive different utilities from the consumption of the good in different seasons. The (seasonal) product differentiation is modelled along the lines of the contributions of Gabszewicz and Thisse (Price Competition, Quality and Income Disparities, 1979) and Shaked and Sutton (Relaxing Price Competition through Product Differentiation, 1982). The authors take into consideration that investments are possible to reduce the degree of seasonality. They show that, for a wide set of parameter configuration, the policy maker finds it optimal to make more effort to reduce seasonality as compared to private producers. The theoretical conclusion is consistent with empirical and anecdotical evidence, especially in the field of tourism markets.

Keywords: seasonality; tourism; public spending (search for similar items in EconPapers)
JEL-codes: D29 L12 L83 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-com and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.econstor.eu/bitstream/10419/55853/1/688023037.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201216

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