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Differentiation and Synergies in Rural Tourism: Estimation and Simulation of the Israeli Market

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  • Anat Tchetchik
  • Aliza Fleischer
  • Israel Finkelshtain

Abstract

This article applies a discrete-choice equilibrium model with product differentiation to study the rural tourism industry in Israel and to jointly estimate the effect of lodging and farm characteristics on consumer preferences and firms' costs. The model accounts for heterogeneity in tastes and technologies and allows for unobservable product characteristics. We find evidence for technological synergy in the joint production of agricultural goods and rural tourism services, but none in the demand. The differentiation in the industry is the major contributor to the price-cost margin, which averages 62%. An additional minor cause is government regulations, which restrict supply. Simulation results demonstrate the growth potential of the industry and show that the government can play an important role in catalyzing growth via investment subsidization, deregulation of supply and information distribution. Copyright 2008, Oxford University Press.

Suggested Citation

  • Anat Tchetchik & Aliza Fleischer & Israel Finkelshtain, 2008. "Differentiation and Synergies in Rural Tourism: Estimation and Simulation of the Israeli Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 553-570.
    • Handle: RePEc:oup:ajagec:v:90:y:2008:i:2:p:553-570
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01112.x
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    Cited by:

    1. Sullins, Martha & Moxon, Drew & Thilmany, Dawn D., 2010. "Developing Effective Marketing Strategies for Agritourism: Targeting Visitor Segments," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 28(2), pages 1-20.
    2. Aliza Fleischer & Judith Rivlin (Byk), 2009. "Quality, Quantity and Duration Decisions in Household Demand for Vacations," Tourism Economics, , vol. 15(3), pages 513-530, September.
    3. Andersson, Hans & Hoffmann, Ruben, 2008. "Farm Tourism and Spatial Competition," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44417, European Association of Agricultural Economists.
    4. Kimhi, Ayal, 2008. "Has Debt Restructuring Facilitatead Structural Transformation on Israeli Family Farms?," Discussion Papers 37943, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    5. Carpio, Carlos E. & Wohlgenant, Michael K. & Boonsaeng, Tullaya, 2008. "The Demand for Agritourism in the United States," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(2), pages 1-16.
    6. Fabio Gaetano Santeramo & Mariangela Morelli, 2016. "Modelling tourism flows through gravity models: a quantile regression approach," Current Issues in Tourism, Taylor & Francis Journals, vol. 19(11), pages 1077-1083, September.
    7. Gaetano, Santeramo Fabio & Mariangela, Morelli, 2014. "Enhancing the foreign demand for agritourism," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L'Informatore Agrario, vol. 2014(2).
    8. Chang, Hung-Hao & Mishra, Ashok K. & Lee, Tzong-Haw, 2019. "A supply-side analysis of agritourism: Evidence from farm-level agriculture census data in Taiwan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(3), July.
    9. Rotem Zelingher & Andrea Ghermandi & Enrica Cian & Malcolm Mistry & Iddo Kan, 2019. "Economic Impacts of Climate Change on Vegetative Agriculture Markets in Israel," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 679-696, October.
    10. Hatan, Shachar & Fleischer, Aliza & Tchetchik, Anat, 2021. "Economic valuation of cultural ecosystem services: The case of landscape aesthetics in the agritourism market," Ecological Economics, Elsevier, vol. 184(C).
    11. Yunxing Zhang & Weizhen Li & Ziyang Li & Meiyu Yang & Feifei Zhai & Zhigang Li & Heng Yao & Haidong Li, 2022. "Spatial Distribution Characteristics and Influencing Factors of Key Rural Tourism Villages in China," Sustainability, MDPI, vol. 14(21), pages 1-26, October.
    12. Santeramo, Fabio Gaetano & Morelli, Mariangela, 2015. "Enhancing the foreign demand for agritourism," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L'Informatore Agrario, vol. 2014(2), pages 1-10, October.
    13. Santeramo, Fabio Gaetano & Barbieri, Carla, 2015. "On the demand for agritourism: a cursory review of methodologies and practice," MPRA Paper 68177, University Library of Munich, Germany.
    14. Ziv Bar-Nahum & Israel Finkelshtain & Rico Ihle & Ofir D. Rubin, 2020. "Effects of violent political conflict on the supply, demand and fragmentation of fresh food markets," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 12(3), pages 503-515, June.
    15. Andersson, Hans & Hoffmann, Ruben, 2008. "Spatial Competition and Farm Tourism - A Hedonic Pricing Model," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6156, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Zoltán Lakner & Anna Kiss & Ivan Merlet & Judit Oláh & Domicián Máté & Janusz Grabara & József Popp, 2018. "Building Coalitions for a Diversified and Sustainable Tourism: Two Case Studies from Hungary," Sustainability, MDPI, vol. 10(4), pages 1-23, April.
    17. Yasuo Ohe, 2012. "Evaluating Operators' Attitudes to Educational Tourism in Dairy Farms: The Case of Japan," Tourism Economics, , vol. 18(3), pages 577-595, June.
    18. Ohe, Yasuo, 2012. "A Stepwise Innovation toward Viable Educational Services in Agriculture: Evidence from Japan," 131st Seminar, September 18-19, 2012, Prague, Czech Republic 135771, European Association of Agricultural Economists.
    19. Bajram Korsita & Luftim Cania, 2016. "Challenges in Agribusiness and Rural Tourism Development in Albania," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 5, December.

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