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Modelling the wider effects of ski lift investments

Author

Listed:
  • Martin Falk

    (Austrian Institute of Economic Research (WIFO))

  • Sigbjorn Landazuri Tveteraas

    (University of Stavanger)

Abstract

This paper investigates the returns to ski lift investments. The analysis covers 370 ski lifts in 45 ski areas in South Tyrol in North Italy (Alto Adige) for the winter seasons 2002/2003 to 2013/2014. Dynamic panel difference-in-differences estimations show that investments in new ski lifts attract more skiers. On average, ski lift operators who have installed a new ski lift will have 6% more skiers in the following winter season. However, when the neighbouring ski areas are included there are signs of cannibalisation, as the net returns to ski lift investments decrease significantly in magnitude in the second half of the sample period. Furthermore, the positive effects of ski lift installations on the number of skiers are only temporary, generally fading out after 2 years. This proves that investing in a stagnating market is associated with risks.

Suggested Citation

  • Martin Falk & Sigbjorn Landazuri Tveteraas, 2020. "Modelling the wider effects of ski lift investments," Empirical Economics, Springer, vol. 59(1), pages 259-274, July.
    • Handle: RePEc:spr:empeco:v:59:y:2020:i:1:d:10.1007_s00181-019-01626-3
    DOI: 10.1007/s00181-019-01626-3
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    More about this item

    Keywords

    Firm growth; Investment; Replacement investments; Ski lift operators; Difference-in-difference model;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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