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Signal effect of a targeted travel subsidy on consumer behavior during the coronavirus disease 2019 pandemic

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  • Takumi Tagashira

    (Hitotsubashi University)

Abstract

Due to the declining demand owing to the coronavirus disease 2019 pandemic, governments worldwide have implemented targeted subsidies to stimulate their domestic demand. This study argues that a single public subsidy implementation has two different mechanisms for demand stimulation: (1) the signal effect and (2) the discount effect. It conducted monthly questionnaire surveys with Japanese consumers during the pandemic and developed a panel dataset. During the data collection, the Japanese government introduced the “go-to-travel” campaign, a typical example of a targeted subsidy. This study utilized this policy implementation and estimated one-way and two-way fixed-effect models. The results show a signal effect, with individuals who were ineligible for the subsidy traveling more after the subsidy was implemented. Furthermore, the analyses indicate the discount effect while controlling for the possible signaling spillovers. This study contributes to the existing literature by focusing on the signal effect, which previous studies have not elucidated.

Suggested Citation

  • Takumi Tagashira, 2023. "Signal effect of a targeted travel subsidy on consumer behavior during the coronavirus disease 2019 pandemic," Marketing Letters, Springer, vol. 34(3), pages 483-496, September.
    • Handle: RePEc:kap:mktlet:v:34:y:2023:i:3:d:10.1007_s11002-022-09663-2
    DOI: 10.1007/s11002-022-09663-2
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