Differentiation and Synergies in Rural Tourism: Estimation and Simulation of the Israeli Market

Posted: 11 Apr 2008

See all articles by Anat Tchetchik

Anat Tchetchik

Bar Ilan University

Aliza Fleischer

Hebrew University of Jerusalem - Department of Agricultural Economics and Management

Israel Finkelshtain

Hebrew University of Jerusalem

Date Written: 2007-06

Abstract

This article applies a discrete-choice equilibrium model with product differentiation to study the rural tourism industry in Israel and to jointly estimate the effect of lodging and farm characteristics on consumer preferences and firms' costs. The model accounts for heterogeneity in tastes and technologies and allows for unobservable product characteristics. We find evidence for technological synergy in the joint production of agricultural goods and rural tourism services, but none in the demand. The differentiation in the industry is the major contributor to the price-cost margin, which averages 62%. An additional minor cause is government regulations, which restrict supply. Simulation results demonstrate the growth potential of the industry and show that the government can play an important role in catalyzing growth via investment subsidization, deregulation of supply and information distribution.

Suggested Citation

Tchetchik, Anat and Fleischer, Aliza and Finkelshtain, Israel, Differentiation and Synergies in Rural Tourism: Estimation and Simulation of the Israeli Market (2007-06). American Journal of Agricultural Economics, Vol. 90, No. 2, pp. 553-570, May 2008, Available at SSRN: https://ssrn.com/abstract=1119003 or http://dx.doi.org/10.1111/j.1467-8276.2007.01112.x

Anat Tchetchik (Contact Author)

Bar Ilan University ( email )

Ramat-Gan 5290002 Israel
Ramat Gan, 5290002
Israel

HOME PAGE: http://geoenv.biu.ac.il/en/node/1657 

Aliza Fleischer

Hebrew University of Jerusalem - Department of Agricultural Economics and Management ( email )

P.O.Box 12
Rehovot 76100
Israel

Israel Finkelshtain

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem 91905, Jerusalem 91905
Israel
+08-9489255 (Phone)

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