Tourism Taxation and Environmental Quality: A Model with Vertical Differentiation of the Accommodation Industry.

TOURISMOS: An International Multidisciplinary Journal of Tourism, Vol. 4, No. 1, pp. 45-62, 2009

11 Pages Posted: 12 Dec 2007 Last revised: 28 Jun 2014

See all articles by Juan Gabriel Brida

Juan Gabriel Brida

Universidad de la República

Juan Sebastián Pereyra

Universidad de la República - Facultad de Ciencias Económicas; El Colegio de México

Multiple version iconThere are 2 versions of this paper

Date Written: September 12, 2007

Abstract

The growth of the tourism sector in the last years, and in particular of the accommodation industry, has increased the importance of investment on the quality of tourism services. In this respect, the environmental quality of destination, has become a tool that hotels have to hold the tourism demand. In this paper we are going to present a model of vertical differentiation in the accommodation industry, where differentiation is associated with quality. Additionally, we assume the existence of a lump sum tax in the accommodation industry. Two are the main results which will be proved in this article; first, if the tourist's willingness to pay for quality increases then both the demand and the price for tourism services increase as a result. However, the increment of the demand for best environmental quality gets higher, and therefore, the environmental quality level of tourism services, that the destination offers, decreases. Second, an increase in the value of the tourism tax leads to an increase in the total environmental quality of the destination. Thus, taxation is a policy instrument which maintains the environmental quality of a tourism destination, but its efficiency depends, according to this model, on the value of the tourist's willingness to pay for environmental quality, or similar, on their incomes.

Keywords: duopoly, tourism demand, hotel service quality, environment

JEL Classification: D43, Q21, L84

Suggested Citation

Brida, Juan Gabriel and Pereyra, Juan Sebastián, Tourism Taxation and Environmental Quality: A Model with Vertical Differentiation of the Accommodation Industry. (September 12, 2007). TOURISMOS: An International Multidisciplinary Journal of Tourism, Vol. 4, No. 1, pp. 45-62, 2009. Available at SSRN: https://ssrn.com/abstract=1068105

Juan Gabriel Brida

Universidad de la República ( email )

Av. 18 de Julio
Montevideo, 1968
Uruguay

Juan Sebastián Pereyra (Contact Author)

Universidad de la República - Facultad de Ciencias Económicas ( email )

Gonzalo Ramírez 1926
CP 11200 Montevideo
Uruguay

El Colegio de México ( email )

Gonzalo Ramírez 1926
CP 11200 Montevideo
Uruguay

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