Investment in Tourism Market: A Dynamic Model of Differentiated Oligopoly

Guido Candela and Roberto Cellini

Environmental & Resource Economics, 2006, vol. 35, issue 1, 58 pages

Abstract: We present a theoretical dynamic model in tourism economics, assuming that the market for tourism is an oligopoly with differentiated products. Destinations can invest in order to improve their stock of physical, natural or cultural resources. Tourism flows yield current revenues, but they are usually detrimental for the stock of resources. We find the solution of the dynamic model, and in particular we find the open-loop Nash equilibrium of the game among destinations, under alternative settings, depending on whether the degree of differentiation among destinations is exogenous or endogenous. In particular, under the latter case, an increase of the number of destinations leads to a higher degree of product differentiation in steady state. Copyright Springer Science+Business Media, Inc. 2006

Keywords: differential games; reservation price; tourism; D43; D92; L83 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (25)

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Working Paper: Investment in Tourism Market: A Dynamic Model of Differentiated Oligopoly (2004)
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DOI: 10.1007/s10640-006-9005-3

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