Tourism Taxation and Environmental Quality: A Model With Vertical Differentiation of the Accommodation Industry
Journal of Tourism, Vol. 4, No. 1, pp. 45-62
Posted: 11 May 2011 Last revised: 28 Jun 2014
Date Written: October 30, 2007
The growth of the tourism sector in the last years, and in particular of the accommodation industry, has increase the importance of investment on the quality of tourism services. In this sense, environmental quality of destination is a tool that hotels have to hold the tourist demand. In this paper the authors presented a model of vertical differentiation in the accommodation industry, where differentiation is associated with quality. Additionally is supposed the existence of a tourist tax in the accommodation sector. Two main results will be proved in this paper. First, if the willingness to pay for quality of the consumers increase then: the demand and price for tourism services increase, but the increment of the demand for best environmental quality is higher; and the environmental quality level of tourism services that the destination offers decrease. Second, an increase of the value of the tourism taxation leads to an increase of the total environmental quality of the destination. Thus, taxation is a policy instrument to maintain the environmental quality of a tourist destination, but there efficiency depends, in the context of this model, on the value of the willingness to pay for environmental quality of the tourists or similar, on their level income.
Keywords: Duopoly, tourism demand, Hotel service quality, environment
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