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Tour operators' price strategie in the Balearic Islands

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  • Joaquín Alegre

    ()
    (Universitat de les Illes Balears)

  • Maria Sard

    ()
    (Universitat de les Illes Balears)

Abstract

In this paper we analyse the package tours prices from a sample of British and German tour operators. The offers correspond to one-week tourist packages in the Balearic Islands in a specific hotel establishment. The period studied comprises the 2002 and 2003 high seasons, what provides us with a dynamic perspective. The paper shows the existence of persistent differences in the mean prices from tour operators, as well as price distributions with different dispersion and shape among tour operators and markets. The time variation of these distributions seems to be linked to the market situation and structure. Although the paper is presented as an empirical investigation, the results can be interpreted in the context of theoretical literature on price dispersion.

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Bibliographic Info

Paper provided by Universitat de les Illes Balears, Departament d'Economía Aplicada in its series DEA Working Papers with number 19.

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Date of creation: Jun 2006
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Handle: RePEc:ubi:deawps:19

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Postal: Edificio Gaspar Melchor de Jovellanos, Crta. de Valldemossa km 7,5, Palma 07122 (BALEARS)
Web page: http://www.uib.es/depart/deaweb/
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Keywords: price dispersion; tour operators’ industry;

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References

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  1. Peter Taylor, 1998. "Mixed Strategy Pricing Behaviour in the UK Package Tour Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 29-46.
  2. John McMillan & Peter B. Morgan, 1988. "Price Dispersion, Price Flexibility, and Repeated Purchasing," Canadian Journal of Economics, Canadian Economics Association, vol. 21(4), pages 883-902, November.
  3. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September.
  4. Steven Salop & Joseph Stiglitz, 1977. "Bargains and ripoffs: a model of monopolistically competitive price dispersion," Special Studies Papers 94, Board of Governors of the Federal Reserve System (U.S.).
  5. Rob, Rafael, 1985. "Equilibrium Price Distributions," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 487-504, July.
  6. Rothschild, Michael, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 689-711, July/Aug..
  7. Erik Lehmann, 2003. "Pricing Behavior on the WEB: Evidence from Online Travel Agencies," Empirica, Springer, vol. 30(4), pages 379-396, December.
  8. Saul Lach, 2002. "Existence And Persistence Of Price Dispersion: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 433-444, August.
  9. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-69, July.
  10. Jennifer F. Reinganum, 1978. "A Simple Model of Equilibrium Price Dispersion," Discussion Papers 335, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. Arnold, Michael A, 2000. "Costly Search, Capacity Constraints, and Bertrand Equilibrium Price Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 117-31, February.
  12. Butters, Gerard R, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 465-91, October.
  13. Jones, Michael A. & Mothersbaugh, David L. & Beatty, Sharon E., 2002. "Why customers stay: measuring the underlying dimensions of services switching costs and managing their differential strategic outcomes," Journal of Business Research, Elsevier, vol. 55(6), pages 441-450, June.
  14. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
  15. Stiglitz, Joseph E., 1989. "Imperfect information in the product market," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 13, pages 769-847 Elsevier.
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