Guido Candela () (University of Bologna and The Rimini Centre for Economics Analysis, Italy.) Massimiliano Castellani () (University of Bologna and The Rimini Centre for Economics Analysis, Italy.) Maurizio Mussoni () (University of Bologna and The Rimini Centre for Economics Analysis, Italy.)
Abstract
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 landbetween 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.
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Publisher Info
Paper provided by Rimini Centre for Economic Analysis in its series Working Paper Series with number
50-07.