IDEAS home Printed from
   My bibliography  Save this article

Investment in Tourism Market and Reputation




Recent contributions in tourism economics acknowledge that the tourism market is imperfectly competitive and, as such, should be studied from an industrial organization perspective. This approach seems especially relevant to shed lights on one issue of importance for tourism destinations: how to achieve sustainable tourism development? Indeed, it has long been empirically observed that tourism development follows a life cycle. After a period of growth, the development of touristic (mountain and seaside) resorts usually stagnate and decline. At least part of the explanation for this pattern is to be found in the evolution of destinations' reputation over time. The present paper investigates the incentives for adjacent tourist resorts to invest in quality in order to maintain their collective reputation. We propose a dynamic model where (1) several adjacent tourist resorts select their tourist flows and (2) invest in order to remedy to the detrimental effects tourism flows have on local environmental amenities. The overall tourist presence and the sum of investments made by tourist resorts jointly define the quality of the touristic product offered by this tourism destination. We assume that this quality cannot be observed by consumers at the time of purchase. However, in this situation of imperfect information, consumers form expectations about the quality of the touristic product offered at any point of time. These expectations define the collective reputation of tourist resorts, determine the position of the tourist resorts' demand curve and constitute the state variable in the differential game. We characterize and compare equilibrium strategies under a noncooperative and investments coordination regimes. Copyright © 2009 Wiley Periodicals, Inc..

Suggested Citation

  • Denis Claude & Georges Zaccour, 2009. "Investment in Tourism Market and Reputation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(5), pages 797-817, October.
  • Handle: RePEc:bla:jpbect:v:11:y:2009:i:5:p:797-817

    Download full text from publisher

    File URL:
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Choi, Jay Pil, 1993. "Cooperative R&D with product market competition," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 553-571.
    2. Claudio Piga, 2003. "Pigouvian Taxation in Tourism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(3), pages 343-359, November.
    3. Carl Shapiro, 1982. "Consumer Information, Product Quality, and Seller Reputation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 20-35, Spring.
    4. Kort, P.M. & Greiner, A. & Feichtinger, G. & Haunschmied, J.L. & Hartl, R.F. & Novak, A.J., 2002. "Environmental effects of tourism industry investments : An intertemporal trade-off," Other publications TiSEM dc61bc25-6bc7-4093-97dd-8, Tilburg University, School of Economics and Management.
    5. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, March.
    6. Carl Shapiro, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 659-679.
    7. Michael L. Katz, 1986. "An Analysis of Cooperative Research and Development," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 527-543, Winter.
    8. Silvia Caserta & Antonio Russo, 2002. "More Means Worse: Asymmetric Information, Spatial Displacement and Sustainable Heritage Tourism," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 26(4), pages 245-260, November.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Malgorzata Ogonowska & Dominique Torre, 2014. "Towards a Sustainable Tourism," GREDEG Working Papers 2014-45, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    2. Malgorzata Ogonowska & Dominique Torre, 2013. "Residents' Influence on the Adoption of Environmental Norms in Tourism," GREDEG Working Papers 2013-17, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    3. repec:eee:touman:v:61:y:2017:i:c:p:426-433 is not listed on IDEAS

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jpbect:v:11:y:2009:i:5:p:797-817. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.