Second Homes vs. Hotels: A Suggestion for a Self-enforcing Policy
We set up a theoretical model, in which the policy maker of a tourism destination has to choose how to allocate the limited natural resource - land - between private holiday accommodations (i.e. second homes) or hotels. In a framework of partial equilibrium, the policy maker minimizes a loss function which measures the loss of political consensus and is de ned by a linear combination of the policy maker and the local community preferences. We can obtain both a corner solution, in which we have extreme choices of only holiday houses or only hotels, and an internal solution, in which we have a linear combination of them. To do that the policy maker can use as economic policy instruments either standard policies (indirect control - a Pigou tax - or direct control - regulation) or non-standard policies (a reinvestment commitment of the rm in the tourism destination). The final policy maker decision was made by assessing the welfare consequences of the policy implications.
|Date of creation:||Jul 2007|
|Date of revision:||Jul 2007|
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- Claudio A. Piga, 2006.
"Pigouvian Taxation in Tourism,"
Discussion Paper Series
2006_2, Department of Economics, Loughborough University, revised Jan 2006.
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