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Tourist choice, competitive tourism markets and the effect of a tourist tax on producers revenues

Asensi Descals-Tormo () and José Ruiz-Tamarit ()
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Asensi Descals-Tormo: Department of Applied Economics, Universitat de València (Spain)

No 2022018, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We propose a model for the tourism sector assuming basically two markets, one for tourist services and the other for accommodation. These sub-markets are considered as separate but interrelated. The nature of the feedback is determined by a vertical complementarity between tourist services and lodging. We obtain the optimal solution of the tourist choice problem, the primary demand for tourist services and the derived demand for overnight stays. Then, we focus on the equilibrium outcomes assuming perfectly competitive tourism markets. We don’t address the externalities caused by tourism activities. Consequently, we move away from efficiency by introducing a tax on overnight stays and inspecting the consequences for the competitiveness and for producers’ revenues in each market. The answer key elements are, apart from reservation prices, the direct and cross price elasticities of demand for tourist services. The study of structural parameters extends and completes our analysis of tourism.

Keywords: Complementarity; Elasticity; Preferences; Tax; Tourism (search for similar items in EconPapers)
JEL-codes: D11 H2 Z3 (search for similar items in EconPapers)
Date: 2022-07-27
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2022018

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