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The Demand of Car Rentals: a Microeconometric Approach with Count Models and Survey Data

Listed author(s):
  • ANTONIO MENEZES

    (Centre of Applied Economics Studies of the Atlantic the University of the Azores, Portugal)

  • AINURA UZAGALIEVA

    (Centre of Applied Economics Studies of the Atlantic at the Department of Economics and Management, the University of the Azores, Portugal; CERGE-EI, Charles University and the Academy of Sciences, Prague, Czech Republic)

This study analyzes the demand side of the tourism market in the Autonomous Region of the Azores, Portugal, ranked by National Geographic as the second island destination for sustainable tourism among 111 islands in the world. Due to the high frequency of car rentals, this region is a Òfly-and-driveÓ destination, experienced rapid growth in the tourism sector in recent years. It is well known that the excessive use of cars leads to negative externalities such as pollution and the degradation of roads. Considering ecological fragility, typical for small islands, it is crucial to investigate the extent of negative externalities for internalizing the congestion costs. This topic is very important in terms of policy-making for developing sustainable tourism destination as well as in a global environmental context, from the perspectives of "eco-taxes" used as instruments for enhancing environmental protection. A distinctive contribution of this study is the attention paid to the diversity of tourists used car rental services in the Azores. The demand function of car rentals is analyzed based on highly disaggregated, individual data containing a large number of tourists visited the Azores and the family of count models. Then, based on the price elasticity of demand for car rentals, the desired tax rates are suggested for internalizing the congestion costs.

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Article provided by Rimini Centre for Economic Analysis in its journal Review of Economic Analysis.

Volume (Year): 5 (2013)
Issue (Month): 1 (June)
Pages: 25-41

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Handle: RePEc:ren:journl:v:5:y:2013:i:1:p:25-41
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  1. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
  2. Daniel M. Hellerstein, 1991. "Using Count Data Models in Travel Cost Analysis with Aggregate Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 860-866.
  3. Mullahy, John, 1986. "Specification and testing of some modified count data models," Journal of Econometrics, Elsevier, vol. 33(3), pages 341-365, December.
  4. Bruno De Borger & John Peirson & Roger Vickerman, 2001. "An overview of policy instruments," Chapters,in: Reforming Transport Pricing in the European Union, chapter 2 Edward Elgar Publishing.
  5. Newbery, David M, 1990. "Pricing and Congestion: Economic Principles Relevant to Pricing Roads," Oxford Review of Economic Policy, Oxford University Press, vol. 6(2), pages 22-38, Summer.
  6. Tiago Neves Sequeira & Paulo Macas Nunes, 2008. "Does tourism influence economic growth? A dynamic panel data approach," Applied Economics, Taylor & Francis Journals, vol. 40(18), pages 2431-2441.
  7. Grogger, J T & Carson, Richard T, 1991. "Models for Truncated Counts," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 6(3), pages 225-238, July-Sept.
  8. Michael McAleer & Riaz Shareef & Bernardo da Veiga, 2005. "Risk Management of Daily Tourist Tax Revenues for the Maldives," Working Papers 2005.137, Fondazione Eni Enrico Mattei.
  9. V. Kerry Smith, 1988. "Selection and Recreation Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 29-36.
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