Abstract
In tourism, competition occurs at two levels. First, competition occurs among tourist destinations, countries or regions. If we consider countries as the level of analysis, recent years have witnessed a significant increase in the degree of international competition, triggered by factors like the reduction of transportation costs and the ICT revolution. New destinations have emerged, leading to a sharp reduction in the concentration of international arrivals. In 1950, the top five countries in terms of international tourist arrivals (USA, Canada, Italy, France and Switzerland) accounted for around 71% of international tourist arrivals worldwide. In 2006, the corresponding value was 33%, and the list of “top five destinations” changed as well (in that year, they were France, Spain, USA, China and Italy).
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- 1.
The source for these data is the World Tourism Organization (www.unwto.org).
- 2.
For instance, focusing on Europe (EU 27 countries), the number of bed places in hotels has risen from 10,050,487 in 1998 to 11,717,241 in 2007. The increase is common to all large countries except France. Data are taken from Eurostat (epp.eurostat.ec.europa.eu).
- 3.
Following Lancaster (1979), a product (a good or a service) can be described as a list of characteristics to which consumers attach positive value. Two products are vertically differentiated if one product is superior to the other in all characteristics, while they are horizontally differentiated if a product is superior to the other in some characteristics, and inferior in others.
- 4.
With respect to the international trade literature, our model shows similarities with Richardson (1999). This author considers the competition between two countries, whose firms offer homogeneous products. Government chooses trade policies (the level of trade tariffs) and competition policies (the number of firms in each country). To this set-up, we add horizontal and vertical differentiation between the “products” offered by the firms in each country.
- 5.
In the international trade literature, the hypothesis of differentiation by country of origin is known as “Armington’s hypothesis”, following Armington (1969).
- 6.
It can be verified that second order conditions are satisfied. We shall assume that parameters are such that an interior equilibrium is guaranteed in both destinations.
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Acknowledgments
The author wishes to thank two anonymous referees for useful comments and suggestions. This research has been conducted within the project “Competition within and between tourist destinations”, funded by the Polo di Rimini – University of Bologna. The usual disclaimer applies.
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Zirulia, L. (2011). Competition Between and Within Tourist Destinations. In: Matias, Á., Nijkamp, P., Sarmento, M. (eds) Tourism Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2725-5_3
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DOI: https://doi.org/10.1007/978-3-7908-2725-5_3
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