Development Strategies for Tourism Destinations: Tourism Sophistication vs. Resource Investments

This paper investigates the effectiveness of development strategies for tourism destinations. We show that resource investments unambiguously increase tourism revenues and that increasing the degree of tourism sophistication, that is increasing the variety of tourism related goods and services, increases tourism activity and decreases the perceived quality of the destination’s resource endowment, leading to an ambiguous effect on tourism revenues. We disentangle these two effects and characterize situations where increasing the degree of tourism sophistication is a viable development strategy and where it is impracticable without resource investment.Tourism destination; tourism sophistication; resource investments; tourism demand; development strategy

Destination Unknown. Is There any Economics Beyond Tourism Areas?

In recent years, several papers have been focussing on various aspects of the tourism destination. The destination is a central issue within tourism studies, embodying in one single concept all the specific and problematic features of tourism, such as its systemic nature, in which “space” plays a fundamental role. In this paper we argue that is in the analysis of destinations that tourism economics shapes itself as an independent discipline within applied economics. Firstly, destinations are neither microeconomic agents nor macroeconomic aggregates, but territorial systems supplying at least one tourism product (a bundle of goods and services) able to satisfy the complex needs of the tourism demand. Secondly, the economic analysis of destinations identifies two specific theorems, the love of variety theorem and the coordination theorem which allow to interpret the tourism destination as a particular type of district, sharing at the same time some of the features of the industrial and of the cultural district.tourism economics, tourism areas, destination management

Destination Unknown. Is there any Economics Beyond Tourism Areas?

In recent years, several papers have been focussing on various aspects of tourism destinations. The destination is a central issue within tourism studies, embodying in one single concept all the specific and problematic features of tourism, such as its systemic nature in which "space" plays a fundamental role. In this paper we argue that tourism economics shapes itself as an independent discipline within applied economics through the analysis of destinations. Firstly, destinations are neither microeconomic agents nor macroeconomic aggregates, but territorial systems which supply at least one tourism product (a bundle of goods and services) able to satisfy the complex needs of tourism demand. Secondly, the economic analysis of destinations can identify two specific theorems, the love of variety theorem and the coordination theorem which allow to interpret the tourism destination as a particular type of economic district, which shares some of the features of the industrial district and some others of the cultural district. Classification-JEL: L1, L83, R3, R5Tourism economics, tourism areas, destination management, industrial districts, cultural districts

Investment in Tourism Market: A Dynamic Model of Differentiated Oligopoly

We present a theoretical model in tourism economics, assuming that the market for tourism is an oligopoly with differentiated products. Destinations (i.e., countries, regions, sites or even firms) can invest in order to improve their carrying capacity that can be interpreted as the stock of physical, natural or cultural resources. Tourism flows yield current revenues, but they are usually detrimental for the cultural or natural resource stock over time. We find the solution of the dynamic model, and in particular we find the open-loop Nash equilibrium of the game among the destinations, under alternative settings, depending on whether the arrivals are exogenous or endogenous, and depending on whether the degree of differentiation among destinations is exogenous or endogenous. The model is rather general, and it can provide answers to different specific questions, like the choice between mass- vs. elite-tourism development strategies; the effect of the number of competing products upon profits; the optimal degree of product differentiation.Tourism, Differentiated games, Reservation price

Tribal Art Market. Signs and Signals

In this paper, we present a model for the marketability of a Tribal artwork and we test this model empirically using a unique hand-collected dataset, which comprises the worldwide Tribal art market auctions between 1999 and 2008. Our results show a significant relationship between the probability of an artwork to be sold and several signs and signals. The effect of the auction estimated prices on the probability of sales is nonlinear, and allows us to divide the Tribal art market into two price regimes. In the low-price regime, the effect of the auction estimated price on the probability of sales is negative. In the high-price regime, the effect of the auction estimated price on the probability of sales is positive.Tribal art, Signs, Signals, Veblen effect, Conspicuous consumption

Second Homes vs. Hotels: A Suggestion for a Self-enforcing Policy

We set up a theoretical model, in which the policy maker of a tourism destination has to choose how to allocate the limited natural resource - land - between private holiday accommodations (i.e. second homes) or hotels. In a framework of partial equilibrium, the policy maker minimizes a loss function which measures the loss of political consensus and is de ned by a linear combination of the policy maker and the local community preferences. We can obtain both a corner solution, in which we have extreme choices of only holiday houses or only hotels, and an internal solution, in which we have a linear combination of them. To do that the policy maker can use as economic policy instruments either standard policies (indirect control - a Pigou tax - or direct control - regulation) or non-standard policies (a reinvestment commitment of the …rm in the tourism destination). The final policy maker decision was made by assessing the welfare consequences of the policy implications.

The Economics of Local Tourist Systems

In this paper we analyse the Local Tourist System (LTS) as a particular case of Marshallian Industrial District. The LTS allows the identification of more effective policy tools for managing tourism. First, through the concept of LTS, the policy maker can take into account the complexity of tourism, characterised by a strong heterogeneity of goods, services and subjects involved; second, LTS helps promote a stronger co-ordination between the public and the private sector, by identifying a homogeneous territory and recognising its importance in tourists' decisions; third, through the LTS the policymaker can analyze the externalities and promotes the idea of collaborating networks in a context of local development. In the LTS framework, the anticommon problem can be analysed and contrasted. As the tourist has to buy different but intertwined goods which compose the holiday package, the failure in one of the markets can lead to the overall failure of the package. A LTS policy has to: i) co-ordinate the price policy of the different firms supplying “single components” of the tourist product; ii) fix the price of the whole product; iii) impute a price to each component. We demonstrate that, through price policy co-ordination and under general conditions, the LTS can increase the size of tourism and the firms’ profits, thereby reaching a more effective and efficient target in tourism policy. The recent introduction of LTS in the Italian legislation can be seen as a positive attempt of improving co-ordination in a complex sector such as tourism.Local tourist systems, Tourism policy

Less Developed Countries, Tourism Investments and Local Economic Development

The present paper analyzes the forward linkages of a multinational’s investment in a resort which kicks off tourism activity in a LDC. We show that, under quite natural assumptions, overnight stays are increasing in the number of tourism related, differentiated goods and services supplied in equilibrium. These goods and services, if supplied by the local community, represent forward linkages of FDI in tourism. We investigate the multinational’s incentives to promote, reduce or eliminate these forward linkages and the effectiveness of some policy instruments available to a local government to leverage on the presence of FDI and to stimulate domestic entrepreneurship

Destination Unknown. Is there any Economics Beyond Tourism Areas?

In recent years, several papers have been focussing on various aspects of tourism destinations. The destination is a central issue within tourism studies, embodying in one single concept all the specific and problematic features of tourism, such as its systemic nature in which “space” plays a fundamental role. In this paper we argue that tourism economics shapes itself as an independent discipline within applied economics through the analysis of destinations. Firstly, destinations are neither microeconomic agents nor macroeconomic aggregates, but territorial systems which supply at least one tourism product (a bundle of goods and services) able to satisfy the complex needs of tourism demand. Secondly, the economic analysis of destinations can identify two specific theorems, the love of variety theorem and the coordination theorem which allow to interpret the tourism destination as a particular type of economic district, which shares some of the features of the industrial district and some others of the cultural district

The Effects of World Heritage Sites on Domestic Tourism: A Spatial Interaction Model for Italy

Culture is gaining increasing importance in the modern tourism industry, and represents a significant force of attraction for tourists (both domestic and international). Cultural tourism allows destinations and regions to expand their customer base, diversify their offer, extend the stay of the tourist, and reduce seasonality. Great efforts are made, by national governments and regions, in order to obtain official designation regarding the relevance of their historical/cultural attractions, for example through UNESCO’s World Heritage Sites (WHS) list. Such an aspect seems particularly relevant for a country like Italy, which has a high number of entries in the WHS list, and where regions take an active role in promoting tourism. Using an 11-year panel of domestic tourism flows, we investigate the importance of the regional endowment in terms of WHS from two perspectives: (a) by separately estimating the effects, on tourism flows, of WHS located in the residence region of tourists and in the destination region; and (b) by taking into account potential spatial substitution/complementarity effects between regions due to their WHS endowment. Finally, a sensitivity analysis is offered to evaluate the spatial extent of the latter