The Economics of Destination Cards

Sonia Messori (), Alessandro Fedele () and Paolo Figini ()
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Sonia Messori: Faculty of Economics and Management, Free University of Bozen-Bolzano, Italy
Alessandro Fedele: Faculty of Economics and Management, Free University of Bozen-Bolzano, Italy
Paolo Figini: Department of Economics, University of Bologna, Italy

No BEMPS110, BEMPS - Bozen Economics & Management Paper Series from Faculty of Economics and Management at the Free University of Bozen

Abstract: Destination cards have been recognized as effective tools for promoting tourism destinations. However, their role as mechanisms for coordination among tourism service providers remains under-explored. We address this gap by developing an enriched version of the Hotelling price competition model to investigate the welfare effects of destination cards. We consider a destination with two price-setting attractions and one complementary good (transportation), and a card offering discounts on attractions and free access to local transportation. By partially internalizing the externalities resulting from service complementarity, we find that the destination card enhances social welfare but may alter the pricing behavior of attractions, potentially reducing tourists’ welfare.

Keywords: Destination Card; Tourist Card; Tourism Destination; Coordination; Welfare Effects; Hotelling Model (search for similar items in EconPapers)
JEL-codes: L13 L83 Z3 (search for similar items in EconPapers)
Pages: [33 pages]
Date: 2025-03
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