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An economic model for tourism destinations: Product sophistication and price coordination

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  • Andergassen, Rainer
  • Candela, Guido
  • Figini, Paolo

Abstract

The paper models the optimal development strategy of a tourism destination by identifying and analyzing two key economic features: i) the long-term choice of whether to invest in the enhancing of natural and/or cultural resources (which act as common goods in the destination) or to increase the degree of sophistication of the tourism product (here intended as the variety of complementary services to accommodation that are demanded by tourists); ii) the short-term choice of whether or not to implement price coordination among local firms, a problem stemming from the anticommon nature of the tourism product. We build a two-stage model for the tourism destination, thus identifying the optimal degree of sophistication of the tourism product and the optimal institutional arrangement in terms of coordination. This approach helps shed light on the rationale underlying the development path taken by different destinations, thus overcoming some of the limits of existing literature and providing a simple taxonomy for the observed diversity of real-world destinations. Accordingly, we provide a classification of destinations based on the type of coordination and on whether the primary resource is natural, cultural or organizational.

Suggested Citation

  • Andergassen, Rainer & Candela, Guido & Figini, Paolo, 2013. "An economic model for tourism destinations: Product sophistication and price coordination," Tourism Management, Elsevier, vol. 37(C), pages 86-98.
  • Handle: RePEc:eee:touman:v:37:y:2013:i:c:p:86-98
    DOI: 10.1016/j.tourman.2012.10.013
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    Cited by:

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    2. Rainer Andergassen & Guido Candela & Paolo Figini, 2017. "The management of tourism destinations," Tourism Economics, , vol. 23(1), pages 49-65, February.
    3. Bruno Marques & Jean Claude Mado & Vincent Valmorin & J Velin, 2018. "Optimal Tourism Product [Produit Touristique Optimal]," Working Papers hal-01687976, HAL.
    4. Luan Chen & Eric Ng & Shyh-Chang Huang & Wei-Ta Fang, 2017. "A Self-Evaluation System of Quality Planning for Tourist Attractions in Taiwan: An Integrated AHP-Delphi Approach from Career Professionals," Sustainability, MDPI, vol. 9(10), pages 1-18, September.
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    6. Tolga Genç & José António Filipe, 2016. "A fuzzy MCDM approach for choosing a tourism destination in Portugal," International Journal of Business and Systems Research, Inderscience Enterprises Ltd, vol. 10(1), pages 23-44.
    7. Carmen D à lvarez-Albelo & José A Martínez-González, 2024. "Should antitrust regulators be wary of inter-firm coordination agreements through a tourism destination card?," Tourism Economics, , vol. 30(2), pages 324-344, March.
    8. José António Filipe, 2014. "Tourism Destinations: A Methodological Discussion on Commons and Anti-commons. The ‘Ammaia’ Project’s Locale Impact," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 4(2), pages 725-725.
    9. Ma, Mingcao & Weng, Jin & Yu, Larry, 2015. "Market size, scale economies, and tourism market structure: A case of historic water town tourism in China," Tourism Management, Elsevier, vol. 49(C), pages 119-137.
    10. Bruno Marques, 2016. "Transport-Tourism: Capacity Coordination [Tourisme-Transport : Capacite De Coordination]," Working Papers hal-01265818, HAL.
    11. Silvia Emili & Paolo Figini & Andrea Guizzardi, 2020. "Modelling international monthly tourism demand at the micro destination level with climate indicators and web-traffic data," Tourism Economics, , vol. 26(7), pages 1129-1151, November.
    12. José António Filipe, 2014. "Tourism Destinations and Local Rental: A Discussion around Bureaucracy and Anticommons. Algarve Case (Portugal)," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 4(4), pages 821-821.
    13. Jorge Luis Ramos García & Juan Pedro Ibarra Michel, 2017. "Social Prosperity Perception in Cultural Tourism Destinations: the Case of Peña de Bernal, Huejotzingo and Yuanhuitlán, México," Traektoriâ Nauki = Path of Science, Altezoro, s.r.o. & Dialog, vol. 3(4(21)), pages 7.1-7.9, April.
    14. Juan Ignacio Pulido-Fernández & María de la Cruz Pulido-Fernández, 2018. "Proposal for an Indicators System of Tourism Governance at Tourism Destination Level," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(2), pages 695-743, June.
    15. Ante Mandić & Lidija Petrić, 2021. "The impacts of location and attributes of protected natural areas on hotel prices: implications for sustainable tourism development," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 833-863, January.
    16. Chia-Wen Lee & Ching Li, 2019. "The Process of Constructing a Health Tourism Destination Index," IJERPH, MDPI, vol. 16(22), pages 1-11, November.
    17. Guido Candela & Massimiliano Castellani & Maurizio Mussoni, 2015. "Keynesian Policies for Tourism: Taxation without Coordination," Tourism Economics, , vol. 21(3), pages 527-541, June.
    18. Bruno Marques, 2016. "Tourisme-Transport : Capacity Coordination [Tourisme-Transport : Capacité De Coordination]," Working Papers hal-01265798, HAL.
    19. Petr Štumpf & Jitka Mattyašovská & Adriana Krištùfková, 2021. "Restart of Hospitality and Tourism: System Dynamics and Scenario-Based Modelling," Academica Turistica - Tourism and Innovation Journal, University of Primorska Press, vol. 14(2), pages 125-136.
    20. Romain Cruse & Bruno Marques, 2013. "Bénéfices et bénéficiaires de l’activité de croisière en Dominique," Documents de Travail 2013-16, CEREGMIA, Université des Antilles et de la Guyane.
    21. Elisabeth Kastenholz & Celeste Eusébio & Maria João Carneiro, 2016. "Purchase of local products within the rural tourist experience context," Tourism Economics, , vol. 22(4), pages 729-748, August.

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    More about this item

    Keywords

    Tourism destination; Product variety; Natural resources; Price coordination; Development strategy;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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