nep-tur New Economics Papers
on Tourism Economics
Issue of 2009‒08‒16
five papers chosen by
Antonello Scorcu
University of Bologna

  1. A Dynamic Model of Economic Growth in a Small Tourism Driven Economy By Schubert, Stefan Franz; Brida, Juan Gabriel
  2. Coping with Externalities in Tourism - A Dynamic Optimal Taxation Approach By Schubert, Stefan Franz
  3. Rispana Valley Historical Area By William Stichter
  4. A Glimpse of the Tiger: How Much are Indians Willing to Pay for It? By Indrila Guha
  5. The economic impacts of air transport liberalization By Grancay, Martin

  1. By: Schubert, Stefan Franz; Brida, Juan Gabriel
    Abstract: The paper studies the dynamics of economic growth caused by an increase in the growth rate of tourism demand. We develop a simple dynamic model of a small open economy, which is completely specialized in the production of tourism services (island economy model), populated by a large number of intertemporally optimizing agents, deriving utility from consuming an imported good. Tourism services are produced by means of a simple AK technology by using imported capital, its accumulation associated with adjustment costs. Moreover, the economy can lend or borrow at the international financial markets at the given world interest rate. Adjustments in the relative price of tourism services ensure market clearance for tourism services. The long-run growth rate of the economy is tied to the growth rate in tourism demand. An increase in the latter increases thus the economy’s long-run balanced growth rate. In contrast to the standard one-good small open economy endogenous growth model, where the economy is always on its balanced growth path, we show that there are transitional dynamics after an increase in the growth rate of tourism demand. In particular, the short-run growth rate of output rises gradually towards its higher long-run level, and the market price of tourism increases during transition. Thus, an increase in the growth of tourism demand, say, caused by higher economic growth abroad, leads to a boom in the small open economy and increasing terms of trade. Adjustments of the relative price of tourism services (i. e. the real exchange rate) can therefore not protect the economy from demand disturbances.
    Keywords: tourism demand; growth; economic dynamics
    JEL: O41 F41 R11
    Date: 2009–03
  2. By: Schubert, Stefan Franz
    Abstract: The paper studies optimal taxation (subvention) when tourism is associated with „multiple externalities“, using a simple dynamic model of a small open economy, which is completely specialized in the production of tourism services and populated by a large number of intertemporally optimizing agents. Depending on the volume of tourism production, the externality can be either positive or negative. We show that the first best optimum, achieved by a central planner, recognizing the externality, can be replicated in a decentralized economy by using a time-varying tax rate. This ensures that (i) the steady state of the first best optimum is reached and that (ii) the speed of convergence to steady state is socially optimal.
    Keywords: tourism demand; externalities; dynamic optimal taxation
    JEL: H21 R13 F21 H23
    Date: 2009–07
  3. By: William Stichter
    Abstract: There are various historical water conservation structures and water-mills in the Rispana valley near Rajpur. There are some of the more important structures and discusses the possibility of preserving the structures. The viability of this preservation can be increased by making the valley a tourist destination where visitors can walk along a circuit that takes in the more prominent structures. Some alternative circuits are also described
    Keywords: history, histories, Rispana valley, Rajpur, structures, tourist, tourist destinations, water-mills, historical, historical water conservation structures, water conservation structures, historical area, Dehradun, village, restoration
    Date: 2009
  4. By: Indrila Guha
    Abstract: The recreational demand for the Indian Sundarban, which is a World Heritage site and a complex mangrove ecosystem that borders India and Bangladesh is estimated. Two alternative methodologies exist for estimating the value of a recreational site. The Contingent Valuation Method (CVM), as a ‘stated preference’ valuation technique, circumvents the absence of markets for environmental goods. this method does not record visitors’ actual behaviour, literature on such techniques indicates that when there is a market for the service to be valued, CVM should be avoided. That is why the Travel Cost Method (TCM) is chosen. The study relied on a primary survey of a sample of visitors to the Indian Sundarban from November 2005 to March 2006. [SANDEE].
    Keywords: world heritage, heritage, Indian Sundarban, mangrove ecosystem, ecosystem, India, Bangladesh, Contingent Valuation Method (CVM), Travel Cost Method (TCM), travel, sundarban, primary survey, market
    Date: 2009
  5. By: Grancay, Martin
    Abstract: Air transport liberalization constitutes a whole new level of globalization. The impacts it brings can be divided into direct, indirect, induced and catalytic. The magnitude of impacts is determined by various factors, including air transport liberalization multiplier, market saturation and the degree of liberalization of other sectors. Airlines profit from increased efficiency derived from economies of scale, economies of scope and density economies. On the demand side, the passengers enjoy better range of available destinations, higher frequency of service and new business models, such as was the entrance of low-cost carriers to the EU market in the second half of the 1990s.
    Keywords: air transport; liberalization; multiplier; elasticity
    JEL: L93 L91
    Date: 2009–07

This nep-tur issue is ©2009 by Antonello Scorcu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.