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Private and public incentive to reduce seasonality: a simple theoretical model

Author

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  • Cellini, Roberto
  • Rizzo, Giuseppe

Abstract

This paper presents a theoretical model to investigate the incentive of private producer and policy-maker to reduce seasonality in a given market, where consumers derive different utilities from the consumption of the good in different seasons. The (seasonal) product differentiation is modeled along the lines of the contributions of Gabszewicz and Thisse (1979) and Shaked and Sutton (1982). We take into consideration that investments are possible to reduce the degree of seasonality. We show that, for a wide set of parameter configuration, the policy maker finds it optimal to make more effort to reduce seasonality as compared to private producers. The theoretical conclusion is consistent with empirical and anecdotical evidence, especially in the field of tourism markets.

Suggested Citation

  • Cellini, Roberto & Rizzo, Giuseppe, 2010. "Private and public incentive to reduce seasonality: a simple theoretical model," MPRA Paper 23588, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:23588
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    File URL: https://mpra.ub.uni-muenchen.de/23588/1/MPRA_paper_23588.pdf
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    File URL: https://mpra.ub.uni-muenchen.de/23898/1/MPRA_paper_23898.pdf
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    References listed on IDEAS

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    1. repec:eee:touman:v:32:y:2011:i:3:p:589-595 is not listed on IDEAS
    2. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
    3. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
    4. GABSZEWICZ, Jean, 2009. "A note on price competition in product differentiation models," CORE Discussion Papers 2009058, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Corluka, Goran & Mikinac, Kresimir & Milenkovska, Angela, 2016. "Classification Of Tourist Season In Costal Tourism," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 7(1), pages 71-83.

    More about this item

    Keywords

    Seasonality; Tourism; Public Spending;

    JEL classification:

    • D29 - Microeconomics - - Production and Organizations - - - Other
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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