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Tourism Tax: Public Spending and Taxation in Tourism Destinations

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  • Guido Candela
  • Massimiliano Castellani
  • Maurizio Mussoni

Abstract

In this paper we investigate the effects of a Keynesian policy in tourists destinations where tourism products are mainly sold through «direct sales» (decentralized solution) and the tourism market equilibrium is characterized by sticky prices and unemployment (coordination failure). A Keynesian demand policy is a Pareto improving solution with respect to the organization of sales by Tour operators or Destination managers (centralized solution), since tourism firms are not worse-off in terms of profits and there is an increase of tourism production as well as of employment. Furthermore, we study the effects of the tourism tax on the Rimini district, an ideal case study to evaluate the implementation of the Italian tourism tax as a Keynesian policy for tourism.

Suggested Citation

  • Guido Candela & Massimiliano Castellani & Maurizio Mussoni, 2013. "Tourism Tax: Public Spending and Taxation in Tourism Destinations," Politica economica, Società editrice il Mulino, issue 3, pages 293-318.
    • Handle: RePEc:mul:je8794:doi:10.1429/77318:y:2013:i:3:p:293-318
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