Can Economics Explain Where All-Inclusive Deals are Offered?

Christian Bladh and Hakan Holm
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Christian Bladh: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

No 2012:5, Working Papers from Lund University, Department of Economics

Abstract: This paper investigates why all-inclusive travel packages are offered at some hotels but not at others. By using the theory of transaction cost, it is argued that all-inclusive contracts mitigate a hold-up problem and that the severity of this problem varies with regards to the hotel’s distance to the resort center. This hypothesis is tested empirically against data from 3798 hotel offers and is strongly supported. Additionally, some country-specific mechanisms related to the general price level and the degree of corruption are analyzed. Countries with all inclusive offers are characterized by a low price level and high corruption.

Keywords: All-inclusive; contracts; hold-up; transaction cost; tourism (search for similar items in EconPapers)
JEL-codes: D23 D86 L14 L83 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2012-01-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Can Economics Explain Where All-Inclusive Deals are Offered? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lunewp:2012_005

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