The efficiency of government promotion of inbound tourism: The case of Australia
This paper examines the effect of tax-funded promotion of inbound tourism on domestic welfare in an open economy setting with increasing returns in the tourism industry. As inbound tourism is a way of extending the market and getting more demand to realize the implication of increasing returns, promotion can help overcome the underproduction of tourism goods. However, taxation leads to a decline in domestic residents' consumption of tourism and non-tourism goods and reduces the competitiveness of the non-tourism industry in the host country. An important result obtained is that government promotion of inbound tourism will not improve welfare unless the degree of increasing returns in the tourism industry is high enough and the national income of the foreign country multiplied by the parameter of marketing effectiveness is larger than the national income of the home country. This finding is supported by a simulation with the case of Australia.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Grinols, Earl L, 1991. "Increasing Returns and the Gains from Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 973-84, November.
- Horstmann, Ignatius J. & Markusen, James R., 1986. "Up the average cost curve: Inefficient entry and the new protectionism," Journal of International Economics, Elsevier, vol. 20(3-4), pages 225-247, May.
- Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Pasquale M. Sgro & Eden S. H. Yu, 2006. "Tourism, Dutch Disease And Welfare In An Open Dynamic Economy," The Japanese Economic Review, Japanese Economic Association, vol. 57(4), pages 501-515.
- C. Simon Fan, 2005. "Increasing Returns, Product Quality and International Trade," Economica, London School of Economics and Political Science, vol. 72(285), pages 151-169, 02.
- Eaton, Jonathan & Panagariya, Arvind, 1979. "Gains from trade under variable returns to scale, commodity taxation, tariffs and factor market distortions," Journal of International Economics, Elsevier, vol. 9(4), pages 481-501, November.
- Werner Antweiler & Daniel Trefler, 2000.
"Increasing Returns and All That: A View From Trade,"
NBER Working Papers
7941, National Bureau of Economic Research, Inc.
- Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
- Dingsheng Zhang & Yew-Kwang Ng, 2004. "Average-cost Pricing, Increasing Returns, and Optimal Output in a Model With Home and Market Production," Econometric Society 2004 Australasian Meetings 322, Econometric Society.
- Ng, Yew-Kwang, 1984. "Quasi-Pareto Social Improvements," American Economic Review, American Economic Association, vol. 74(5), pages 1033-50, December.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
- Haiwen Zhou, 2007. "Increasing Returns, the Choice of Technology, and the Gains from Trade," Southern Economic Journal, Southern Economic Association, vol. 74(2), pages 581-600, October.
- Jean-Jacques Nowak & Mondher Sahli & Pasquale M. Sgro, 2003.
"Tourism, Trade And Domestic Welfare,"
Pacific Economic Review,
Wiley Blackwell, vol. 8(3), pages 245-258, October.
- Bharat R. Hazari & J. J. Nowak, 2003. "Tourism, Taxes And Immiserization: A Trade Theoretic Analysis," Pacific Economic Review, Wiley Blackwell, vol. 8(3), pages 279-287, October.
- Junko Doi & Koichi Futagami, 2004. "Commodity Taxation and the Effects of Entry: A Case of Variety Preferences," Journal of Economics, Springer, vol. 83(3), pages 267-279, December.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Copeland, Brian R, 1991. "Tourism, Welfare and De-industrialization in a Small Open Economy," Economica, London School of Economics and Political Science, vol. 58(232), pages 515-29, November.
- Wattanakuljarus, Anan & Coxhead, Ian, 2008.
"Is tourism-based development good for the poor?: A general equilibrium analysis for Thailand,"
Journal of Policy Modeling,
Elsevier, vol. 30(6), pages 929-955.
- Wattanakuljarus, Anan & Coxhead, Ian, 2006. "Is Tourism-Based Development Good for the Poor? A General Equilibrium Analysis for Thailand," Staff Paper Series 502, University of Wisconsin, Agricultural and Applied Economics.
- Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
- Yang, Xiaokai & Heijdra, Ben J, 1993. "Monopolistic Competition and Optimum Product Diversity: Comment," American Economic Review, American Economic Association, vol. 83(1), pages 295-301, March.
- Hazari, Bharat R. & A-Ng, 1993. "An analysis of tourists' consumption of non-traded goods and services on the welfare of the domestic consumers," International Review of Economics & Finance, Elsevier, vol. 2(1), pages 43-58.
- Brian R. Copeland, 2012. "Tourism And Welfare-Enhancing Export Subsidies," The Japanese Economic Review, Japanese Economic Association, vol. 63(2), pages 232-243, 06.
- Dao‐Zhi Zeng & Xiwei Zhu, 2011. "Tourism And Industrial Agglomeration," The Japanese Economic Review, Japanese Economic Association, vol. 62(4), pages 537-561, December.
- Salih Turan Katircioğlu, 2010. "International Tourism, Higher Education and Economic Growth: The Case of North Cyprus," The World Economy, Wiley Blackwell, vol. 33(12), pages 1955-1972, December.
- Juin‐Jen Chang & Lee‐Jung Lu & Shih‐Wen Hu, 2011. "Congestion Externalities of Tourism, Dutch Disease and Optimal Taxation: Macroeconomic Implications," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 90-108, March.
- Myles, G. D., 1987. "Tax design in the presence of imperfect competition : An example," Journal of Public Economics, Elsevier, vol. 34(3), pages 367-378, December.
- Geoffrey Heal, 1980. "Spatial Structure in the Retail Trade: A Study in Product Differentiation with Increasing Returns," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 565-583, Autumn.
- Dwyer, L. & Forsyth, P., 1992. "The Case for Tourism Promotion: an Economic Analysis," CEPR Discussion Papers 265, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Devereux, Michael B & Head, Allen C & Lapham, Beverly J, 1996. "Monopolistic Competition, Increasing Returns, and the Effects of Government Spending," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 233-54, May.
- Helpman, Elhanan, 1981. "International trade in the presence of product differentiation, economies of scale and monopolistic competition : A Chamberlin-Heckscher-Ohlin approach," Journal of International Economics, Elsevier, vol. 11(3), pages 305-340, August.
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:29:y:2012:i:6:p:2711-2718. 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: (Zhang, Lei)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.