Transport Provision to Tourists by a Cost Minimizing Firm: A Stochastic Characterization
Amitrajeet A. Batabyal
Rochester Institute of Technology
University of Texas at San Antonio - College of Business - Department of Economics
May 21, 2011
Letters in Spatial and Resource Sciences, Vol. 4, pp. 103-108, 2011
We first delineate a general model that accounts for the common features of sightseeing trips to city attractions and to locations such as lakes and parks. Next, we use the theory of discrete-time Markov chains (DTMCs) to formalize this general model and then we compute the one-step transition probabilities of our Markov chain theoretic model. Finally, we show how our Markovian modeling approach can be used to derive the long run expected cost per day that a private firm, in the business of providing transport to tourists, might minimize.
Keywords: Long Run Expected Cost, Tourism, Transport, Uncertainty, Vehicle Breakdown
JEL Classification: L830, R400Accepted Paper Series
Date posted: May 23, 2011
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