Clashes and compromises: Investment policies in tourism destinations
The authors solve a linear problem where a potential conflict between two agents (Destination manager and Firm) arises in a tourism destination. Destination manager has to choose how to allocate limited resources (capital and land) between either second homes or hotels. This conflict stems from the assumption of agents who have different linear preferences with respect to the allocation of limited resources. As a solution to this policy problem the authors consider three different policies: no intervention (laissez faire), taxation and temporary de-taxation policy. Comparing these different policies, the authors show that a compromise solution (internal solution), which results from the de-taxation policy, may be preferred by both agents over the clash of interests outcomes (corner solutions). Thus, the authors show that in a framework of conflict between agents a compromise solution may be preferable to both the absence of public intervention and the imposition of a tax by a public policy maker who has the discretionary power to regulate conflicts.
|Date of creation:||2012|
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- Garfinkel, Michelle R. & Skaperdas, Stergios, 2007.
"Economics of Conflict: An Overview,"
Handbook of Defense Economics,
- Nicola acocella & Giovanni Di Bartolomeo & Andrew Hughes Hallett, . "The theory of economic policy: from a theory of control to a theory of conflict (resolutions)," Working Papers 91/11, Sapienza University of Rome, Metodi e modelli per l'economia, il territorio e la finanza MEMOTEF.
- 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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