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The Economics of Destination Cards

Author

Listed:
  • Sonia Messori

    (Faculty of Economics and Management, Free University of Bozen-Bolzano, Italy)

  • Alessandro Fedele

    (Faculty of Economics and Management, Free University of Bozen-Bolzano, Italy)

  • Paolo Figini

    (Department of Economics, University of Bologna, Italy)

Abstract

Destination cards have been recognized as effective tools for promoting tourism destinations. However, their role as mechanisms for coordination among tourism service providers remains under-explored. We address this gap by developing an enriched version of the Hotelling price competition model to investigate the welfare effects of destination cards. We consider a destination with two price-setting attractions and one complementary good (transportation), and a card offering discounts on attractions and free access to local transportation. By partially internalizing the externalities resulting from service complementarity, we find that the destination card enhances social welfare but may alter the pricing behavior of attractions, potentially reducing tourists’ welfare.

Suggested Citation

  • Sonia Messori & Alessandro Fedele & Paolo Figini, 2025. "The Economics of Destination Cards," BEMPS - Bozen Economics & Management Paper Series BEMPS110, Faculty of Economics and Management at the Free University of Bozen.
    • Handle: RePEc:bzn:wpaper:bemps110
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • Z3 - Other Special Topics - - Tourism Economics
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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