Modelling the wider effects of ski lift investments

Martin Falk and Sigbjorn Landazuri Tveteraas ()
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Sigbjorn Landazuri Tveteraas: University of Stavanger

Empirical Economics, 2020, vol. 59, issue 1, No 9, 259-274

Abstract: Abstract This paper investigates the returns to ski lift investments. The analysis covers 370 ski lifts in 45 ski areas in South Tyrol in North Italy (Alto Adige) for the winter seasons 2002/2003 to 2013/2014. Dynamic panel difference-in-differences estimations show that investments in new ski lifts attract more skiers. On average, ski lift operators who have installed a new ski lift will have 6% more skiers in the following winter season. However, when the neighbouring ski areas are included there are signs of cannibalisation, as the net returns to ski lift investments decrease significantly in magnitude in the second half of the sample period. Furthermore, the positive effects of ski lift installations on the number of skiers are only temporary, generally fading out after 2 years. This proves that investing in a stagnating market is associated with risks.

Keywords: Firm growth; Investment; Replacement investments; Ski lift operators; Difference-in-difference model (search for similar items in EconPapers)
JEL-codes: D22 L25 L83 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s00181-019-01626-3

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