Discussion Paper

No. 2012-16 | March 06, 2012
Private and Public Incentive to Reduce Seasonality: A Theoretical Model
(Published in Special Issue Tourism Externalities)

Abstract

This paper presents a theoretical model to investigate the incentive of private producers and policy makers to reduce seasonality in a given market, where consumers derive different utilities from the consumption of the good in different seasons. The (seasonal) product differentiation is modelled along the lines of the contributions of Gabszewicz and Thisse (Price Competition, Quality and Income Disparities, 1979) and Shaked and Sutton (Relaxing Price Competition through Product Differentiation, 1982). The authors take into consideration that investments are possible to reduce the degree of seasonality. They show that, for a wide set of parameter configuration, the policy maker finds it optimal to make more effort to reduce seasonality as compared to private producers. The theoretical conclusion is consistent with empirical and anecdotical evidence, especially in the field of tourism markets.

Paper submitted to the special issue
Tourism Externalities

JEL Classification

D29 L83 L12

Cite As

Roberto Cellini and Giuseppe Rizzo (2012). Private and Public Incentive to Reduce Seasonality: A Theoretical Model. Economics Discussion Papers, No 2012-16, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2012-16

Assessment



Comments and Questions


Anonymous - Referee Report 1
April 23, 2012 - 08:35

see attached file


Anonymous - Referee Report 2
April 23, 2012 - 11:53

see attached file


Anonymous - Referee Report 3
April 30, 2012 - 09:01

see attached file


Anonymous - From the Authors
April 30, 2012 - 13:19

Thanks for the comments.
We will revise the paper, taking all suggestions into considerations.
R. Cellini, G. Rizzo.