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Differentiation And Synergies In Rural Tourism: Evidence From Israel

  • Tchetchik, Anat
  • Fleischer, Aliza
  • Finkelshtain, Israel

This paper applies a discrete-choice framework with product differentiation to model the rural tourism industry in Israel and to jointly estimate the effect of lodging and farm characteristics on consumer preferences and firms' costs. The model accounts for heterogeneity in tastes and technologies and allows for unobservable product characteristics. We find evidence for technological synergy in joint production of farming and rural hospitality, but none in the demand. The differentiation in the industry is vast and is the major contributor to the price-cost margin, which averages 62%. An additional minor cause are government regulations, which restrict supply. Simulation results demonstrate the growth potential of the industry and show that the government can play an important role in catalyzing growth via investment subsidization, deregulation of supply and information distribution.

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Paper provided by Hebrew University of Jerusalem, Department of Agricultural Economics and Management in its series Discussion Papers with number 7178.

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Date of creation: 2006
Date of revision:
Handle: RePEc:ags:huaedp:7178
Contact details of provider: Postal: Faculty of Agriculture, Food and Environmental Quality Sciences Hebrew University of Jerusalem, P.O. Box 12, Rehovot 76100
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