Tourism Supply - Market Structure
This paper proposes a new model for the development tourism destinations,
the Resort Development Spectrum. The model builds on the broad tourism
destination life cycle research field. The Resort Development Spectrum model
is unique in that it is based on the operation of the market and focuses
specifically on the operation of the supply side. Different phases of the
Resort Development Spectrum are characterized by different equilibrium points
between demand and supply. At each phase of the spectrum different supply
characteristics exist for example in the provision of accommodation, transport
facilities, number of recreation facilities, type of entertainment venues or
level of promotion activities. Borooach, V. K. 1999. "The Supply of Hotel Rooms in Queensland, Australia."
Annals of Tourism Research 26(4):985-1003. The papers examines the supply decisions of hotel and motel owners with
respect to guest rooms. This decision is hypothesized to depend upon earnings
per room, room occupancy rates, and the rate of interest. The reaction of
hoteliers to changes in the values of these particular variables is modeled
econometrically for the 1986-94 period. The supply of guest rooms was strongly
responsive to increases in earnings, but was less influenced by increases in
room occupancy rate or by changes in interest rate. The author argues that the
present study suggests that it is likely that, in most regions, in determining
supply responses, room prices will play the major role and that room occupancy
rates will be assigned a minor part.
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Prideaux, B. 2000. "The Resort
Development Spectrum - A New Approach to Modeling Resort Development."
Tourism Management 21:225-240.
Sinclair, M. T. and M. Stabler. 1997.
The Theory of Tourism Supply and Its Market Structure. In The Economics of
Tourism. New York, Routledge: 58-94 This chapter focuses on the supply of tourism from a neoclassical economics
perspective and the market structure of the four market sectors:
accommodation, transport and intermediaries. It discusses the various
neoclassical economic concepts of perfect competition, contestable markets,
monopoly, monopolitistic competition and oligopoly, and what characteristics
of each the tourism market sectors exhibit. It concludes with a discussion of
a number of factors of tourism supply including: number and size of firms;
degree of market concentration and level of entry / exit barriers; economies
and diseconomies of scale and economics of scope; capital indivisibilities,
fixed capital and associated fixed costs of operations; price discrimination
and product differentiation; and pricing policies.