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Understanding tourists’ expenditure patterns: a stochastic frontier approach within the framework of multiple discrete–continuous choices

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  • Andrea Pellegrini

    (Università della Svizzera italiana (USI))

  • Igor Sarman

    (Università della Svizzera italiana (USI))

  • Rico Maggi

    (Università della Svizzera italiana (USI))

Abstract

This article analyzes the determinants of tourists’ expenditure behavior through the joint adoption of two microeconometric approaches, namely, the Stochastic Frontier (SF) and the Multiple Discrete Continuous Extreme Value (MDCEV) model. Despite the attention that analysts have dedicated to consumers’ expenditure behavior in recent years, several limitations concerning the role of budget and the phases of money allocation are still affecting the literature on the topic. In this study, the SF is employed to identify the unobserved individual maximum level of spending allotted for a trip. Once estimated, the frontier is included as a travel budget in the utility-maximizing framework of a MDCEV model. The MDCEV approach allows to simultaneously assess two moments characterizing spending decisions. That is, the decision to allocate the budget to several expenditure categories and the decision concerning the amount to allocate to each category. Data adopted for this research is collected by the Swiss Statistical Office (UST) through a representative Household Budget Survey (Haushaltsbudgeterhebung). Data related to Swiss residents’ leisure travel expenditures are investigated; more specifically, the expenditure categories considered in the analysis are Accommodation, Transportation, Shopping and Food & Beverage.

Suggested Citation

  • Andrea Pellegrini & Igor Sarman & Rico Maggi, 2021. "Understanding tourists’ expenditure patterns: a stochastic frontier approach within the framework of multiple discrete–continuous choices," Transportation, Springer, vol. 48(2), pages 931-951, April.
    • Handle: RePEc:kap:transp:v:48:y:2021:i:2:d:10.1007_s11116-020-10083-2
    DOI: 10.1007/s11116-020-10083-2
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    Cited by:

    1. Palma, David & Hess, Stephane, 2022. "Extending the Multiple Discrete Continuous (MDC) modelling framework to consider complementarity, substitution, and an unobserved budget," Transportation Research Part B: Methodological, Elsevier, vol. 161(C), pages 13-35.
    2. Shobhit Saxena & Abdul Rawoof Pinjari & Chandra R. Bhat & Aupal Mondal, 2024. "A flexible multiple discrete–continuous probit (MDCP) model: application to analysis of expenditure patterns of domestic tourists in India," Transportation, Springer, vol. 51(4), pages 1299-1326, August.
    3. Tzong-Shyuan Chen & Chaang-Iuan Ho, 2022. "The Application of a Two-Stage Decision Model to Analyze Tourist Behavior in Accommodation," Economies, MDPI, vol. 10(4), pages 1-21, March.
    4. Saxena, Shobhit & Pinjari, Abdul Rawoof & Bhat, Chandra R., 2022. "Multiple discrete-continuous choice models with additively separable utility functions and linear utility on outside good: Model properties and characterization of demand functions," Transportation Research Part B: Methodological, Elsevier, vol. 155(C), pages 526-557.

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