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An optimal size for rural tourism villages with agglomeration and congestion effects

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  • Anat Tchetchik
  • Aliza Fleischer
  • Israel Finlkeshtain

Abstract

Helping to sustain a viable rural sector, rural tourism enjoys public support in many countries. We claim that due to congestion and agglomeration externalities in the rural accommodation market, public support should be integrated into a broader local development policy that regulates the number of accommodation units in one locality. To demonstrate this, we extended an equilibrium model that accounts for product differentiation and oligopolistic competition to address congestion and agglomeration effects, and applied it to data collected in northern Israel. We show that, under the prevailing policy measures, the number of accommodation units can exceed the optimal one, leading to loss of welfare. , Oxford University Press.

Suggested Citation

  • Anat Tchetchik & Aliza Fleischer & Israel Finlkeshtain, 2012. "An optimal size for rural tourism villages with agglomeration and congestion effects," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 39(4), pages 685-706, September.
    • Handle: RePEc:oup:erevae:v:39:y:2012:i:4:p:685-706
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    File URL: http://hdl.handle.net/10.1093/erae/jbr040
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    Cited by:

    1. Ciani, Adriano, 2014. "Exploring best practices in territorial management for rural tourism and agritourism," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 189668, European Association of Agricultural Economists.

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