Title: Tourism, congestion, taxation, and strategic interaction

Authors: Vijay Mohan, Munirul H. Nabin, Pasquale M. Sgro

Addresses: Deakin Business School, Deakin University, 336 Glenferrie Rd, Malvern 3144, Victoria, Australia. ' Deakin Business School, Deakin University, 336 Glenferrie Rd, Malvern 3144, Victoria, Australia. ' Deakin Business School, Deakin University, 336 Glenferrie Rd, Malvern 3144, Victoria, Australia

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.

Keywords: tourism policy; congestion; taxation; strategic interaction; small island economies; small islands; island tourism; tourism tax revenue; government policy; business strategy.

DOI: 10.1504/IJTP.2007.015523

International Journal of Tourism Policy, 2007 Vol.1 No.2, pp.134 - 152

Published online: 24 Oct 2007 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article