Tourism, congestion, taxation, and strategic interaction
by Vijay Mohan, Munirul H. Nabin, Pasquale M. Sgro
International Journal of Tourism Policy (IJTP), Vol. 1, No. 2, 2007

Abstract: This paper examines the strategic interaction between firms and governments in two Small Island Tourism Economies (SITEs). In a situation where congestion can threaten the viability of tourism industries in SITEs, we highlight the role of two factors that determine the distribution of tourists across SITEs: whether the tourism market is vertically or horizontally differentiated, and the extent to which tourists care about congestion. Under these circumstances, counterintuitive results are possible: congestion in a SITE may rise in response to tourists caring more about congestion in the SITE. Moreover, maximising tourism tax revenue emerges as a dominant strategy for governments.

Online publication date: Wed, 24-Oct-2007

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