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Quality and Congestion in Environmental Goods — The Road to the Wangapeka

In: Dimensions of Trade Policy

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  • Martin Richardson

Abstract

An increasing complaint heard among New Zealand residents is that their enjoyment of local environmental resources is being diminished by increased congestion from foreign visitors. This paper considers a model of vertical differentiation in which foreign high-value and domestic low-value consumers incur congestion costs in using a common resource. We demonstrate that reducing quality in the face of increased foreign demand is optimal absent discriminatory prices (but not otherwise). We also consider the provision of multiple environmental goods and demonstrate that providing differential qualities may be optimal even if domestic consumers do not use the high-quality resources at all.

Suggested Citation

  • Martin Richardson, 2017. "Quality and Congestion in Environmental Goods — The Road to the Wangapeka," World Scientific Book Chapters, in: Dimensions of Trade Policy, chapter 16, pages 329-357, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813207615_0016
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    2. Mélody Leplat & Philippe Le Goffe, 2009. "Faut-il réguler l'encombrement des sites récréatifs ? Un modèle de choix discret avec participation," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 90(1), pages 51-77.
    3. Eugenio-Martin, Juan L., 2011. "Assessing social carrying capacity of tourism destinations with random utility models/Evaluación de la capacidad de carga social de los destinos turísticos con modelos de utilidad aleatoria," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 29, pages 881-902, Diciembre.
    4. Navratil, J. & Picha, K. & Buchecker, M. & Martinat, S. & Svec, R. & Brezinova, M. & Knotek, J., 2019. "Visitors’ preferences of renewable energy options in “green” hotels," Renewable Energy, Elsevier, vol. 138(C), pages 1065-1077.
    5. Leplat, Mélody & Le Goffe, Philippe, 2009. "Faut-il réguler l'encombrement des sites récréatifs ? Un modèle de choix discret avec participation," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 90(01).

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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