Tourism Taxation and Environmental Quality in a Model with Vertical Differentiation

Juan Gabriel Brida () and Juan S. Pereyra

MPRA Paper from University Library of Munich, Germany

Abstract: The environmental quality of destination has become a tool that hotels have to hold the tourism demand. In this paper we are going to present a model of vertical differentiation in the accommodation industry, where differentiation is associated with quality. Additionally, we assume the existence of a lump sum tax in the accommodation industry. Two are the main results which will be proved in this article; first, if the tourist's willingness to pay for quality increases then both the demand and the price for tourism services increase as a result. However, the increment of the demand for best environmental quality gets higher, and therefore, the environmental quality level of tourism services, that the destination offers, decreases. Second, an increase in the value of the tourism tax leads to an increase in the total environmental quality of the destination.

Keywords: duopoly; tourism demand; hotel service quality; environment (search for similar items in EconPapers)
JEL-codes: O1 M1 L83 (search for similar items in EconPapers)
Date: 2008-09-10, Revised 2008-12-19
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Published in TOURISMOS: An International Multidisciplinary Journal of Tourism 1.4(2009): pp. 45-62

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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:25305

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