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Should I stay or should I go? : Weather forecasts and the economics of short breaks

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  • L. Zirulia

Abstract

The aim of this paper is to model the decisions of tourists and a monopolist firm when weather forecasts are available. Before deciding whether to go on holiday or not, but after the firm has decided and posted its price, tourists can look at weather forecasts. Our results show that the price chosen by the firm and the corresponding equilibrium profit are decreasing as a function of the accuracy of weather forecasts. Consumers, instead, are better off the more accurate weather forecasts become. Managerial and policy implications are also derived.

Suggested Citation

  • L. Zirulia, 2015. "Should I stay or should I go? : Weather forecasts and the economics of short breaks," Working Papers wp1034, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp1034
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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