IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/25305.html
   My bibliography  Save this paper

Tourism Taxation and Environmental Quality in a Model with Vertical Differentiation

Author

Listed:
  • Brida, Juan Gabriel
  • Pereyra, Juan S.

Abstract

The environmental quality of destination has become a tool that hotels have to hold the tourism demand. In this paper we are going to present a model of vertical differentiation in the accommodation industry, where differentiation is associated with quality. Additionally, we assume the existence of a lump sum tax in the accommodation industry. Two are the main results which will be proved in this article; first, if the tourist's willingness to pay for quality increases then both the demand and the price for tourism services increase as a result. However, the increment of the demand for best environmental quality gets higher, and therefore, the environmental quality level of tourism services, that the destination offers, decreases. Second, an increase in the value of the tourism tax leads to an increase in the total environmental quality of the destination.

Suggested Citation

  • Brida, Juan Gabriel & Pereyra, Juan S., 2008. "Tourism Taxation and Environmental Quality in a Model with Vertical Differentiation," MPRA Paper 25305, University Library of Munich, Germany, revised 19 Dec 2008.
    • Handle: RePEc:pra:mprapa:25305
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/25305/1/MPRA_paper_25305.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wauthy, Xavier, 1996. "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 345-353, September.
    2. Aleix Calveras, 2003. "Incentives of International and Local Hotel Chains to Invest in Environmental Quality," Tourism Economics, , vol. 9(3), pages 297-306, September.
    3. Carl Bonham & Byron Gangnes, 1995. "Intervention Analysis with Cointegrated Time Series: The Case of the Hawaii Hotel Room Tax," Working Papers 199505, University of Hawaii at Manoa, Department of Economics.
    4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    5. 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.
    6. Warnken, Jan & Bradley, Melanie & Guilding, Chris, 2004. "Exploring methods and practicalities of conducting sector-wide energy consumption accounting in the tourist accommodation industry," Ecological Economics, Elsevier, vol. 48(1), pages 125-141, January.
    7. Cremer, Helmuth & Thisse, Jacques-Francois, 1991. "Location Models of Horizontal Differentiation: A Special Case of Vertical Differentiation Models," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 383-390, June.
    8. Accinelli, Elvio & Brida, Juan Gabriel & Carrera, Edgar & Pereyra, Juan, 2007. "The Effects On Environmental Investment Of Changes In Tourism Demand," MPRA Paper 6372, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olugbenga A. Onafowora & Oluwole Owoye, 2020. "Tourism Development and Air Pollution in Caribbean SIDs: A Bootstrap Panel Granger Causality Analysis," Journal of Tourismology, Istanbul University, Faculty of Economics, vol. 6(2), pages 221-239, December.

    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. Corrado Benassi & Alessandra Chirco & Caterina Colombo, 2019. "Vertical differentiation beyond the uniform distribution," Journal of Economics, Springer, vol. 126(3), pages 221-248, April.
    2. Cédric Argenton, 2010. "Exclusive Quality," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 690-716, September.
    3. Luigi Filippini & Gianmaria Martini, 2010. "Strategic Choice Between Process And Product Innovation Under Different Competitive Regimes," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 12(02), pages 139-159.
    4. Bacchiega, Emanuele & Minniti, Antonio, 2009. "The Quality-Income effect and the selection of location," Journal of Urban Economics, Elsevier, vol. 65(2), pages 209-215, March.
    5. Laine, Liisa T. & Ma, Ching-to Albert, 2017. "Quality and competition between public and private firms," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 336-353.
    6. Marco A. Marini & Ornella Tarola & Jacques-François Thisse, 2020. "Is Environmentalism the Right Strategy to Decarbonize the World?," Working Papers 2020.31, Fondazione Eni Enrico Mattei.
    7. Fabian Herweg, 2012. "Relaxing competition through quality differentiation and price discrimination," Journal of Economics, Springer, vol. 106(1), pages 1-26, May.
    8. Fageda, Xavier & Flores-Fillol, Ricardo & Lin, Ming Hsin, 2020. "Vertical differentiation and airline alliances: The effect of antitrust immunity," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    9. Buehler, Benno & Schuett, Florian, 2014. "Certification and minimum quality standards when some consumers are uninformed," European Economic Review, Elsevier, vol. 70(C), pages 493-511.
    10. Schmidt, Robert C., 2009. "Welfare in differentiated oligopolies with more than two firms," International Journal of Industrial Organization, Elsevier, vol. 27(4), pages 501-507, July.
    11. Montez, João & Marxen, Annabelle, 2020. "Licensing at the patent cliff and market entry," CEPR Discussion Papers 14276, C.E.P.R. Discussion Papers.
    12. Corrado Benassi & Alessandra Chirco & Caterina Colombo, 2006. "Vertical Differentiation And The Distribution Of Income," Bulletin of Economic Research, Wiley Blackwell, vol. 58(4), pages 345-367, October.
    13. Benassi, Corrado & Castellani, Massimiliano & Mussoni, Maurizio, 2016. "Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 86-96.
    14. Pei‐Cheng Liao, 2008. "A Note On Market Coverage In Vertical Differentiation Models With Fixed Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 60(1), pages 27-44, January.
    15. repec:ebl:ecbull:v:4:y:2003:i:20:p:1-9 is not listed on IDEAS
    16. Li, Youping, 2014. "Price leadership in a vertically differentiated market," Economic Modelling, Elsevier, vol. 38(C), pages 67-70.
    17. L. Lambertini, 2001. "Dynamic Duopoly with Vertical Differentiation," Working Papers 396, Dipartimento Scienze Economiche, Universita' di Bologna.
    18. Stefan Lutz & Mina Baliamoune-Lutz, 2003. "Mutual Recognition of National Minimum Quality Standards may Support International Convergence," Journal of Industry, Competition and Trade, Springer, vol. 3(4), pages 293-311, December.
    19. Sreya Kolay & Rajeev K. Tyagi, 2022. "On the Effects of Raised Rival’s Costs," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(4), pages 567-586, June.
    20. X. Henry Wang, 2003. "A Note on the High–quality Advantage in Vertical Differentiation Models," Bulletin of Economic Research, Wiley Blackwell, vol. 55(1), pages 91-99, January.
    21. Luciano Fanti & Luca Gori, 2013. "Stability Analysis in a Bertrand Duopoly with Different Product Quality and Heterogeneous Expectations," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 481-501, December.

    More about this item

    Keywords

    duopoly; tourism demand; hotel service quality; environment;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • 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:pra:mprapa:25305. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.