Investment on Environmental Quality of a Tourist Region: An Economic Model with Vertical Differentiation and Externalities

Anatolia: an International Journal of Tourism and Hospitality Research, Vol. 19, No. 2, pp. 345-350, 2008

7 Pages Posted: 27 Dec 2007 Last revised: 5 Jun 2011

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

Date Written: December 24, 2007

Abstract

In this paper we present an economic model to analyze the impact produced by changes of tourist's income on the demand for tourist services and on the investments of hotels on environmental quality. The ingredients of the model are an oligopoly tourist market with a vertical product differentiation and a continuum of consumers characterized by their location. We show that the level of environmental quality selected by the hotels depends on the income level of the tourists and that the demand for hotel services depends positively on the level of their own investments to preserve the natural characteristics of the tourist region where they are located.

Keywords: environmental quality, sustainable tourism

JEL Classification: D43, L83, Q21, Q26

Suggested Citation

Brida, Juan Gabriel and Pereyra, Juan Sebastián, Investment on Environmental Quality of a Tourist Region: An Economic Model with Vertical Differentiation and Externalities (December 24, 2007). Anatolia: an International Journal of Tourism and Hospitality Research, Vol. 19, No. 2, pp. 345-350, 2008. Available at SSRN: https://ssrn.com/abstract=1078450

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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