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2012 | OriginalPaper | Chapter

6. A Close Examination of the Consumer Theory Applied to the Tourist

Authors : Guido Candela, Paolo Figini

Published in: The Economics of Tourism Destinations

Publisher: Springer Berlin Heidelberg

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Abstract

This chapter is devoted to present and explain advanced models of consumption applied to the tourist’s choice, which can be seen as extensions of the basic and standard models of consumption presented in Chap. 5. Particularly, four extensions of the consumer theory will be examined throughout the chapter.

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previous chapter The Consumer Theory Applied to the Tourist

next chapter Production in Tourism

The allocation across alternative types of tourism and destinations will be carried out in subsequent stages of the multistage model.

Note that although the concepts of full price and shadow price (see Sect. 5.5.1) both refer to the allocation of time, they are quite different concepts: the full price accounts for the price of time spent for the consumption of the holiday, while the shadow price accounts for the price of time spent for its production. Moreover, the full price is identical for every tourist working at the wage w, while the shadow price is not borne by the tourist who purchases the package holiday from a tour operator but only by the self-organizing tourist.

The income-time paradox is described by Edgar Lee Masters in the Spoon River Anthology where he writes about activities which, like tourism, are time consuming: “In youth my wings were strong and tireless//But I did not know the mountains//In age I knew the mountains//But my weary wings could not follow my vision//Genius is wisdom and youth”. (Masters 1915, p. 127)

However, no substantial change appears in case we were to investigate the choice among alternative destinations for a given type of tourism.

We remind that the position of A ₁ and A ₂ on the segments depends on M _tou and on the prices of the two holidays, and is the solution of the second stage of the multistage model of Sect. 5.3.

We will not study the uncertainty on the alternatives, referring to Agliardi (1988) and Nicolau (2010) for an application to tourism of the directional choice model developed by Georgescu-Roegen (1936) under the assumption of local preferences.

The advantage of the simultaneous search carried out in advance is even more evident nowadays, thanks to the meta-search engines such as Booking.com. The economic consequence of these websites is to render the marginal cost of an additional query basically equal to zero, implying that the optimal size of the search sample increases (see Chap. 12). However, in real-world searches, the problem is tremendously complicated by the quality issue, which we avoided in this simple model, by assuming the same quality for all the hotels.

We would have to assume that the choice variable is the tourist surplus, which inversely depends on price and directly on a quality index.

In this case, the tourist may consider the price as an indicator of quality, so to prefer those purchases characterized by higher price; for such estimation procedure to be rational, the assumption of a positive correlation between quality and price of a product has to be introduced.

However, as we saw in the previous section, it may be quite difficult to assess and judge this information in the case of experience goods.

The happy hour is the commercial practice of bars and restaurants to offer discounts in particular times of the day (usually before the evening/night peak time).

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Title: A Close Examination of the Consumer Theory Applied to the Tourist
Authors: Guido Candela
Paolo Figini
Publisher: Springer Berlin Heidelberg
Book: The Economics of Tourism Destinations
Print ISBN: 978-3-642-20873-7

Electronic ISBN: 978-3-642-20874-4

Copyright Year: 2012
DOI: https://doi.org/10.1007/978-3-642-20874-4_6

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