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War, terror, and the tourism market in Israel

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  • Aliza Fleischer
  • Steven Buccola

Abstract

A supply and demand model of the Israeli hotel industry is developed, distinguishing between its domestic and foreign sectors. Model simulations are employed to examine the impacts of war and terrorist incidents on tourist activity and hotel revenues. Foreign demand for Israeli hotel stays is highly price-elastic and income-inelastic, and moderately sensitive to terrorist events. Domestic demand is price-inelastic, income-elastic, and terror-insensitive. In the wake of terror attacks, hotels' supply or minimum prices to Israeli tourists shift downward, reducing local market prices and encouraging more local tourism. However, the magnitude of these shifts is minor, and the local market thus provides little buffer for dropoffs in foreign tourism. By permitting excess capacity in such fashion, hotels respond rationally to the price inelasticity of local demand.

Suggested Citation

  • Aliza Fleischer & Steven Buccola, 2002. "War, terror, and the tourism market in Israel," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1335-1343.
  • Handle: RePEc:taf:applec:v:34:y:2002:i:11:p:1335-1343
    DOI: 10.1080/00036840110099252
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    Citations

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    Cited by:

    1. Pieter A. Gautier & Arjen Siegmann & Aico van Vuuren, 2007. "The Effect of the Theo van Gogh Murder on House Prices in Amsterdam," Tinbergen Institute Discussion Papers 07-013/3, Tinbergen Institute.
    2. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2010. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part I)," Discussion Papers of DIW Berlin 1049, DIW Berlin, German Institute for Economic Research.
    3. Bruck, Tilman & Wickstrom, Bengt-Arne, 2004. "The economic consequences of terror: guest editors' introduction," European Journal of Political Economy, Elsevier, vol. 20(2), pages 293-300, June.
    4. Michael Beenstock & Daniel Felsenstein & Ziv Rubin, 2015. "Visa waivers, multilateral resistance and international tourism: some evidence from Israel," Letters in Spatial and Resource Sciences, Springer, vol. 8(3), pages 357-371, November.
    5. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, February.
    6. Eldor, Rafi & Melnick, Rafi, 2004. "Financial markets and terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 367-386, June.
    7. Ahlfeldt Gabriel M. & Franke Bastian & Maennig Wolfgang, 2015. "Terrorism and International Tourism: The Case of Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 235(1), pages 3-21, February.
    8. Duha Altindag, 2014. "Crime and International Tourism," Journal of Labor Research, Springer, vol. 35(1), pages 1-14, March.
    9. Daniel Felsenstein & Michael Beenstock & Ziv Rubin, 2015. "Visa Waivers, Multilateral Resistance and International Tourism: Some Evidence from Israel," ERSA conference papers ersa15p187, European Regional Science Association.
    10. Dawood Mamoon, 2014. "How a Terrorist Attack Accounts for Trade Deficit in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(12), pages 517-527, December.
    11. Marina Tkalec & Ivan Zilic, 2017. "Does Proximity to Conflict Affect Tourism: Evidence from NATO Bombing," Working Papers 1704, The Institute of Economics, Zagreb.
    12. Gautier, Pieter A. & Siegmann, Arjen & Van Vuuren, Aico, 2009. "Terrorism and attitudes towards minorities: The effect of the Theo van Gogh murder on house prices in Amsterdam," Journal of Urban Economics, Elsevier, vol. 65(2), pages 113-126, March.
    13. Shashitha Gimhani Jayakody, 2017. "The Impact of the Sri Lankan Civil War on the Stock Market Performances," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 394-402.
    14. William F. Shughart, 2011. "Terrorism in Rational Choice Perspective," Chapters,in: The Handbook on the Political Economy of War, chapter 8 Edward Elgar Publishing.

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