Private and public incentive to reduce seasonality: A theoretical model
AbstractThis paper presents a theoretical model to investigate the incentive of private producer and policymaker to reduce seasonality in a given market, where consumers derive different utilities from the consumption of the good in different seasons. The (seasonal) product differentiation is modelled along the lines of the contributions of Gabszewicz and Thisse (Price Competition, Quality and Income Disparities, 1979) and Shaked and Sutton (Relaxing Price Competition through Product Differentiation, 1982). The authors take into consideration that investments are possible to reduce the degree of seasonality. They show that, for a wide set of parameter configuration, the policy maker finds it optimal to make more effort to reduce seasonality as compared to private producers. The theoretical conclusion is consistent with empirical and anecdotical evidence, especially in the field of tourism markets. --
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2012-16.
Date of creation: 2012
Date of revision:
seasonality; tourism; public spending;
Other versions of this item:
- Cellini, Roberto & Rizzo, Giuseppe, 2012. "Private and public incentive to reduce seasonality: A theoretical model," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(43), pages 1-33.
- D29 - Microeconomics - - Production and Organizations - - - Other
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-14 (All new papers)
- NEP-COM-2012-03-14 (Industrial Competition)
- NEP-TUR-2012-03-14 (Tourism Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- GABSZEWICZ, Jean, 2009. "A note on price competition in product differentiation models," CORE Discussion Papers 2009058, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Ghysels,Eric & Osborn,Denise R., 2001.
"The Econometric Analysis of Seasonal Time Series,"
Cambridge University Press, number 9780521565882, November.
- Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
- Jaskold Gabszewicz, J. & Thisse, J. -F., 1979.
"Price competition, quality and income disparities,"
Journal of Economic Theory,
Elsevier, vol. 20(3), pages 340-359, June.
- Javier Capó Parrilla & Antoni Riera Font & Jaume Rosselló Nadal, 2006. "The Accommodation Determinants of Seasonal Patterns," CRE Working Papers (Documents de treball del CRE) 2006/01, Centre de Recerca Econòmica (UIB ·"Sa Nostra"), revised Feb 2006.
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