IDEAS home Printed from https://ideas.repec.org/a/sae/miceco/v12y2024i3p308-325.html
   My bibliography  Save this article

COVID-19 and Its Effects on Rent Prices for the Hospitality Industry: An Economic Model for the Rebus Sic Stantibus Clause

Author

Listed:
  • Juan Pedro Aznar Alarcon

Abstract

The COVID-19 pandemic made hotels around the world to experience a huge drop in revenues as lockdowns restricted mobility. For many hotel operators, the rent of the building is one of the most important fixed costs. The Rebus Sic Stantibus clause allows judges to rule that changes can be made to the economic conditions of contracts when a supervening event, not foreseen by the parties, causes economic hardship. This paper analyses, considering different market structures and the degree of product differentiation, how the rent for hotel facilities agreed in long-term contracts will change if the clause is applied now, reducing by law current rents. JEL Classifications : K12, K22, D43, L83

Suggested Citation

  • Juan Pedro Aznar Alarcon, 2024. "COVID-19 and Its Effects on Rent Prices for the Hospitality Industry: An Economic Model for the Rebus Sic Stantibus Clause," Studies in Microeconomics, , vol. 12(3), pages 308-325, December.
  • Handle: RePEc:sae:miceco:v:12:y:2024:i:3:p:308-325
    DOI: 10.1177/23210222221119372
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/23210222221119372
    Download Restriction: no

    File URL: https://libkey.io/10.1177/23210222221119372?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Akio Kawasaki & Takao Ohkawa & Makoto Okamura, 2019. "Inter-group competition through joint marketing efforts and intra-group Cournot competition," Journal of Economics, Springer, vol. 128(3), pages 203-224, December.
    2. Michael J. Mazzeo, 2002. "Product Choice and Oligopoly Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 221-242, Summer.
    3. Hazledine, Tim, 2010. "Oligopoly price discrimination with many prices," Economics Letters, Elsevier, vol. 109(3), pages 150-153, December.
    4. Anna Nagurney & Dong Li, 2014. "A Dynamic Network Oligopoly Model with Transportation Costs, Product Differentiation, and Quality Competition," Computational Economics, Springer;Society for Computational Economics, vol. 44(2), pages 201-229, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Federico Ciliberto & Elie Tamer, 2009. "Market Structure and Multiple Equilibria in Airline Markets," Econometrica, Econometric Society, vol. 77(6), pages 1791-1828, November.
    2. Iain M. Cockburn & Megan J. MacGarvie, 2011. "Entry and Patenting in the Software Industry," Management Science, INFORMS, vol. 57(5), pages 915-933, May.
    3. Nishida, Mitsukuni & Gil, Ricard, 2014. "Regulation, enforcement, and entry: Evidence from the Spanish local TV industry," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 11-23.
    4. Philip G. Gayle & Zijun Luo, 2015. "Choosing between Order-of-Entry Assumptions in Empirical Entry Models: Evidence from Competition between Burger King and McDonald's Restaurant Outlets," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 129-151, March.
    5. Wang, Yafeng & Graham, Brett, 2009. "Generalized Maximum Entropy estimation of discrete sequential move games of perfect information," MPRA Paper 21331, University Library of Munich, Germany.
    6. Christos Genakos & Mario Pagliero, 2022. "Competition and Pass-Through: Evidence from Isolated Markets," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 35-57, October.
    7. Kim, Donghyuk, 2023. "Market size, competition, and entrepreneurs’ location choices," Economics Letters, Elsevier, vol. 229(C).
    8. Shon M. Ferguson, 2015. "Endogenous Product Differentiation, Market Size and Prices," Review of International Economics, Wiley Blackwell, vol. 23(1), pages 45-61, February.
    9. Hackl, Franz & Kummer, Michael E. & Winter-Ebmer, Rudolf & Zulehner, Christine, 2014. "Market structure and market performance in E-commerce," European Economic Review, Elsevier, vol. 68(C), pages 199-218.
    10. Jeffrey R. Campbell & Hugo A. Hopenhayn, 2005. "Market Size Matters," Journal of Industrial Economics, Wiley Blackwell, vol. 53(1), pages 1-25, March.
    11. Martin Pesendorfer & Philipp Schmidt-Dengler, 2003. "Identification and Estimation of Dynamic Games," NBER Working Papers 9726, National Bureau of Economic Research, Inc.
    12. Martin Gaechter & Peter Schwazer & Engelbert Theurl, 2013. "Entry into the Physicians’ Market: Empirical Evidence from the Outpatient Sector in Austria," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 245-260, December.
    13. Mingshu Wang, 2021. "Polycentric urban development and urban amenities: Evidence from Chinese cities," Environment and Planning B, , vol. 48(3), pages 400-416, March.
    14. Steven Berry & Alon Eizenberg & Joel Waldfogel, 2016. "Optimal product variety in radio markets," RAND Journal of Economics, RAND Corporation, vol. 47(3), pages 463-497, August.
    15. Liran Einav (Stanford University), 2004. "Not All Rivals Look Alike: An Empirical Model for Discrete Games with Asymmetric Rivals," Econometric Society 2004 North American Winter Meetings 626, Econometric Society.
    16. Varela, Mauricio J., 2018. "The costs of growth: Accelerated growth and crowd-out in the Mexican supermarket industry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 1-52.
    17. Christian Bontemps & Raquel Menezes Bezerra Sampaio, 2020. "Entry games for the airline industry," Post-Print hal-02137358, HAL.
    18. Gautam Gowrisankaran & John Krainer, 2004. "The Welfare Consequences of ATM Surcharges: Evidence from a Structural Entry Model," Working Papers 04-16, NET Institute, revised Nov 2004.
    19. Nagurney, Anna & Saberi, Sara & Shukla, Shivani & Floden, Jonas, 2015. "Supply chain network competition in price and quality with multiple manufacturers and freight service providers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 248-267.
    20. Sault, Joanne & Tovianen, Otto & Waterson, Michael, 2003. "Learning And Location," Economic Research Papers 269587, University of Warwick - Department of Economics.

    More about this item

    Keywords

    Rebus Sic Stantibus; oligopolistic competition; equilibrium price; product differentiation;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:miceco:v:12:y:2024:i:3:p:308-325. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.