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Tourism Taxation and Environmental Quality in a Model with Vertical Differentiation

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  • Brida, Juan Gabriel
  • Pereyra, Juan S.

Abstract

The environmental quality of destination has become a tool that hotels have to hold the tourism demand. In this paper we are going to present a model of vertical differentiation in the accommodation industry, where differentiation is associated with quality. Additionally, we assume the existence of a lump sum tax in the accommodation industry. Two are the main results which will be proved in this article; first, if the tourist's willingness to pay for quality increases then both the demand and the price for tourism services increase as a result. However, the increment of the demand for best environmental quality gets higher, and therefore, the environmental quality level of tourism services, that the destination offers, decreases. Second, an increase in the value of the tourism tax leads to an increase in the total environmental quality of the destination.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25305.

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Date of creation: 10 Sep 2008
Date of revision: 19 Dec 2008
Publication status: Published in TOURISMOS: An International Multidisciplinary Journal of Tourism 1.4(2009): pp. 45-62
Handle: RePEc:pra:mprapa:25305

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Related research

Keywords: duopoly; tourism demand; hotel service quality; environment;

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References

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  1. Cremer, Helmuth & Thisse, Jacques-Francois, 1991. "Location Models of Horizontal Differentiation: A Special Case of Vertical Differentiation Models," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 383-90, June.
  2. Warnken, Jan & Bradley, Melanie & Guilding, Chris, 2004. "Exploring methods and practicalities of conducting sector-wide energy consumption accounting in the tourist accommodation industry," Ecological Economics, Elsevier, vol. 48(1), pages 125-141, January.
  3. Wauthy, Xavier, 1996. "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 345-53, September.
  4. Accinelli, Elvio & Brida, Juan Gabriel & Carrera, Edgar & Pereyra, Juan, 2007. "The Effects On Environmental Investment Of Changes In Tourism Demand," MPRA Paper 6372, University Library of Munich, Germany.
  5. Carl Bonham & Byron Gangnes, 1995. "Intervention Analysis with Cointegrated Time Series: The Case of the Hawaii Hotel Room Tax," Working Papers 199505, University of Hawaii at Manoa, Department of Economics.
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