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Estimating Price Effects in an Almost Ideal Demand Model of Outbound Thai Tourism to East Asia

Author

Listed:
  • Chia-Lin Chang

    (Department of Applied Economics, Department of Finance, National Chung Hsing University Taichung, Taiwan)

  • Thanchanok Khamkaew

    (Faculty of Economics, Maejo University, Thailand)

  • Michael McAleer

    (Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute, The Netherlands, Department of Quantitative Economics, Complutense University of Madrid, and Institute of Economic Research, Kyoto University)

Abstract

This paper analyzes the responsiveness of Thai outbound tourism to East Asian destinations, namely China, Hong Kong, Japan, Taiwan and Korea, to changes in effective relative price of tourism, total real total tourism expenditure, and one-off events. The nonlinear and linear Almost Ideal Demand (AID) models are estimated using monthly data to identify the price competitiveness and interdependencies of tourism demand for competing destinations in both long run (static) and short run error correction (dynamic) specifications. Homogeneity and symmetry are imposed in the long run and short run AID models to estimate the elasticities. The income and price elasticities provide useful information for public and private tourism agents at the various destinations to maintain and improve price competitiveness. The empirical results show that price competitiveness is important for tourism demand for Japan, Korea and Hong Kong in the long run, and for Hong Kong and Taiwan in the short run.

Suggested Citation

  • Chia-Lin Chang & Thanchanok Khamkaew & Michael McAleer, 2012. "Estimating Price Effects in an Almost Ideal Demand Model of Outbound Thai Tourism to East Asia," Documentos de Trabajo del ICAE 2012-02, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    • Handle: RePEc:ucm:doicae:1202
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    References listed on IDEAS

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    More about this item

    Keywords

    Almost Ideal Demand (AID) model; Tourism demand; Price competitiveness; Substitutes; Budget shares; Error correction.;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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