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A Theoretical Analysis of Preference Matching by Tourists and Destination Choice

Amitrajeet Batabyal () and Seung Jick Yoo

MPRA Paper from University Library of Munich, Germany

Abstract: How does the phenomenon of preference matching by tourists affect their choice between two possible destinations? We study this question. It costs less (more) to vacation in destination A (B). Tourists choose to either vacation in A or B. They differ in their incomes. These incomes are uniformly distributed on the unit interval. Our analysis leads to four results. First, when the cost differential parameter satisfies a particular condition, both destinations are visited in the equilibrium. Second, when this parametric condition holds, in any equilibrium in which the mean income of the tourists varies across the two destinations, every tourist vacationing in A has a lower income than every tourist vacationing in B. Third, there exists an income cutoff point and all tourists with lower (higher) incomes choose to vacation in A (B). Finally, in the equilibrium with income sorting, it is possible to make all tourists better off by modifying their destination choices.

Keywords: Destination Choice; Income; Preference Matching; Tourism; Uncertainty (search for similar items in EconPapers)
JEL-codes: D81 L83 (search for similar items in EconPapers)
Date: 2020-03-30, Revised 2020-04-30
New Economics Papers: this item is included in nep-mig and nep-tur
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