Price dynamics and market competition in resort industry: An agent-based modelling approach

Abstract

When resort quality is unclear before consumption, destinations use tools like customer profiles, numbers, and pricing strategies to attract tourists. To understand how these factors influence market dynamics, this study employs an Agent-Based Model (ABM) that simulates interactions between tourists and resorts, incorporating key elements such as pricing strategies, budget constraints, and crowding effects. By comparing competitive and heuristic pricing strategies, the findings reveal that heuristic approaches promote market stability, consumer diversity, and firm resilience, while competitive strategies often lead to market homogenization and reduced profitability. Access to market information is crucial for enhancing consumer utility and fostering healthy competition. These insights emphasize the need to balance short-term competitiveness with long-term sustainability, offering practical guidance for policymakers and destination managers. While based on stylized simulations, this research provides a foundation for further studies incorporating real-world data and addressing tourism market complexities.The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This study has been carried out in the framework of the research project “Digital Transition and Innovation in the Labor Market and Mature Sectors. Taking Advantage of AI and Platform Economy (DILATO)”, with reference TED2021-129600A-I00 funded by MCIN/AEI /10.13039/501100011033 and by European Union NextGenerationEU/PRTR. This work has been also supported by the Ibero-American Programme for Science and Technology for Development (CYTED)