Tourism Economics and Policy

Wayne Dwyer, Peter Forsyth, Larry Dwyer

Description

Comprehensive textbook covering the latest approaches and ideas which influence tourism economics and policy globally

Since the publication of the first edition of this seminal textbook, the tourism economics landscape has undergone many changes. In this concise revised edition, the authors have incorporated new approaches and ideas influencing tourism economics and policy. This includes discussions of the implications of the sharing economy and its effect on industry structure in accommodation and transport, and Artificial Intelligence (AI) techniques that are being increasingly employed in tourism forecasting. It also includes new material on surface and marine transport, resident quality of life issues, the price mechanism, the economic contribution of tourism, tourism and economic growth, and tourism and sustainable development. It remains an important and accessible text for students, researchers and practitioners in tourism economics and tourism policy.

Part 1 Tourism Demand and Supply

Chapter 1. The Demand for Tourism

Chapter 2. Tourism Supply

Chapter 3. The Price Mechanism

Chapter 4. Tourism and Market Structure

Chapter 5. Strategic Pricing in Tourism

Part 2 Tourism Forecasting

Chapter 6. Forecasting Tourism Demand

Part 3 Tourism’s Economic Contribution and Economic Impacts

Chapter 7. Economic Contribution of Tourism

Chapter 8. Measuring Economic Contribution: Tourism Satellite Accounts

Chapter 9. Economic Impacts of Tourism

Chapter 10. Economic Evaluation of Special Events

Part 4 Tourism Investment and Taxation

Chapter 11. Investment by Tourism Firms

Chapter 12. Investment in Tourism Infrastructure

Chapter 13. Taxation of Tourism

Part 5 Tourism and transport

Chapter 14. Tourism and Transport

Part 6 Tourism and the Environment

Chapter 15. Valuing Tourism’s Environmental Effects

Chapter 16. Economic Instruments and Environmental Protection in Tourism

Part 7 Tourism, Growth and Sustainability

Chapter 17. Tourism and Economic Growth

Chapter 18. Tourism and Sustainable Development

Part 8 Destination Competitiveness

Chapter 19. Destination Competitiveness

Part 9 Future Directions

Chapter 20. Future Directions in Tourism Economics

Sujets

• Economic Development
• Industries
• ECONOMICS
• Hospitality
• Professional
• Undergraduate education
• Text
• Postgraduate education
• General officer
• Economic growth
• Tourism
• Development
• Business
• General
• Research
• Postgraduate
• Undergraduate
• Industrie

Informations

• Publié par: Channel View Publications
• Date de parution: 14 janvier 2020
• Nombre de lectures: 0
• EAN13: 9781845417338
• Langue: English
• Poids de l'ouvrage: 5 Mo

Extrait

Tourism Economics and Policy

ASPECTS OF TOURISM TEXTS Series Editors:Chris Cooper(Leeds Beckett University, UK), C. Michael Hall(University of Canterbury, New Zealand)and Dallen J. Timothy(Arizona State University, USA)

This new series of textbooks aims to provide a comprehensive set of titles for higher level under graduate and postgraduate students. The titles will be focused on identified areas of need and reflect a contemporary approach to tourism curriculum design. The books are specially written to focus on the needs, interests and skills of students and academics. They will have an easytouse format with clearly defined learning objectives at the beginning of each chapter, comprehensive summary material, end of chapter review questions and further reading and websites sections. The books will be international in scope with examples and cases drawn from all over the world.

All books in this series are externally peerreviewed.

Full details of all the books in this series and of all our other publications can be found on http:// www.channelviewpublications.com, or by writing to Channel View Publications, St Nicholas House, 31–34 High Street, Bristol BS1 2AW, UK.

ASPECTS OF TOURISM TEXTS: 5

Tourism Economics and Policy

2nd Edition

Larry Dwyer, Peter Forsyth and Wayne Dwyer

CHANNEL VIEW PUBLICATIONS Bristol • Blue Ridge Summit

DOI https://doi.org/10.21832/DWYER7314 Library of Congress Cataloging in Publication Data A catalog record for this book is available from the Library of Congress. Names: Dwyer, Larry, author.| Forsyth, P. (Peter), author.| Dwyer, Wayne, author. Title: Tourism Economics and Policy/Larry Dwyer, Peter Forsyth, and Wayne Dwyer. Description: Second Edition. | Blue Ridge Summit, Pennsylvania: Channel View Publications, 2020. | Series: Aspects of Tourism Texts: 5 | First edition published 2010. | Includes bibliographical references and index. | Summary: “This revised edition incorporates new material on the sharing economy, AI, surface and marine transport, resident quality of life issues, the price mechanism, the economic contribution of tourism, and tourism and economic growth. It remains an accessible text for students, researchers and practitioners in tourism economics and policy”—Provided by publisher. Identifiers: LCCN 2019035501 (print) | LCCN 2019035502 (ebook) | ISBN 9781845417314 (Paperback) | ISBN 9781845417321 (Hardback) | ISBN 9781845417338 (Adobe PDF) | ISBN 9781845417345 (ePub) | ISBN 9781845417352 (Kindle Edition) Subjects: LCSH: Tourism—Forecasting. | Tourism—Management. | Tourism—Government policy. Classification: LCC G155.A1 D96 2020 (print) | LCC G155.A1 (ebook) | DDC 338.4/791—dc23 LC record available at https://lccn.loc.gov/2019035501 LC ebook record available at https://lccn.loc.gov/2019035502

British Library Cataloguing in Publication Data A catalogue entry for this book is available from the British Library.

ISBN13: 9781845417321 (hbk) ISBN13: 9781845417314 (pbk)

Channel View Publications UK: St Nicholas House, 31–34 High Street, Bristol BS1 2AW, UK. USA: NBN, Blue Ridge Summit, PA, USA.

Website: www.channelviewpublications.com Twitter: Channel_View Facebook: https://www.facebook.com/channelviewpublications Blog: www.channelviewpublications.wordpress.com

Copyright © 2020 Larry Dwyer, Peter Forsyth and Wayne Dwyer.

All rights reserved. No part of this work may be reproduced in any form or by any means without permission in writing from the publisher.

The policy of Multilingual Matters/Channel View Publications is to use papers that are natural, renewable and recyclable products, made from wood grown in sustainable forests. In the manufacturing process of our books, and to further support our policy, preference is given to printers that have FSC and PEFC Chain of Custody certification. The FSC and/or PEFC logos will appear on those books where full certification has been granted to the printer concerned.

Typeset by Nova Techset Private Limited, Bengaluru and Chennai, India. Printed and bound in the UK by Short Run Press Printed and bound in the US by NBN

CONTENTS

Preface ........................................................................................................................................xvii

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Tourism Demand and Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The demand for tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Tourism supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The price mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Tourism and market structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Strategic pricing in tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Tourism Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Tourism’s Economic Contribution and Economic Impacts . . . . . . . . . . . . . . . . . . . 5 The economic contribution of tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Measuring economic contribution: Tourism Satellite Accounts (TSA) . . . . . 6 The economic impacts of tourism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Economic evaluation of special events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Tourism Investment and Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Investment by tourism firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Investment in tourism infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Taxation and tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Tourism and Transport. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Tourism and the Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Valuing tourism’s environmental effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Economic instruments and environmental protection in tourism . . . . . . . . 11 Tourism, Growth and Sustainability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Tourism and economic growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Tourism and sustainable development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Destination Competitiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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CONTENTS

Tourism Demand and Supply 1The Demand for Tourism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.2 Factors Influencing Tourism Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.2.1 Demand for tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1.2.2 Demand for a tourism product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1.3 Tourism Demand and Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1.3.1 Price elasticity of demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 1.3.2 Income elasticity of demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 1.3.3 Crossprice elasticity of demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 1.3.4 Marketing (advertising) elasticity of demand . . . . . . . . . . . . . . . . . . . 31 1.4 Measuring Demand for International Tourism Arrivals . . . . . . . . . . . . . . . . 32 1.4.1 Dependent variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 1.4.2 Independent (explanatory) variables . . . . . . . . . . . . . . . . . . . . . . . . . . 35 1.4.3 Statistical testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 1.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

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Tourism Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Tourism products are not like other products . . . . . 2.2 Factors Influencing Tourism Supply . . . . . . . . . . . . . . . . . . . . 2.2.1 Tourism supply and price . . . . . . . . . . . . . . . . . . . . . . 2.2.2 Tourism supply and nonprice factors . . . . . . . . . . . . 2.3 Tourism Supply and Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Production, Costs and Supply . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.2 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.3 The relationship between production and costs. . . . 2.4.4 External economies . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.5 Economies of scale versus economies of scope . . . . 2.5 Private Costs and Social Costs in Tourism. . . . . . . . . . . . . . . 2.6 Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6.1 Supply chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 Conclusions and Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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50 50 52 52 54 55 57 59 59 60 62 67 68 69 69 69 72

The Price Mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 3.2 The Price Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 3.2.1 Excess demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 3.2.2 Excess supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

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3.6

CONTENTS

Changes in Equilibrium Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 3.3.1 Changes in demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 3.3.2 Changes in supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 3.3.3 Changes in both demand and supply. . . . . . . . . . . . . . . . . . . . . . . . . . 80 Outcome of Market Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 3.4.1 Economic efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 3.4.2 Welfare maximization: consumer and producer surplus . . . . . . . . . . 82 Limitations of the Price Mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 3.5.1 Market power influences prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 3.5.2 Consumer sovereignty is less powerful than often assumed. . . . . . . 85 3.5.3 Imperfect information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 3.5.4 Economic inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 3.5.5 Externalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 3.5.6 Economic instability and government intervention in markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Conclusions and Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Tourism and Market Structure. . . . . . . . . . . . . . . . 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Market Structure . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Perfect competition . . . . . . . . . . . . . . . . 4.2.2 Monopoly . . . . . . . . . . . . . . . . . . . . . . . . 4.2.3 Monopolistic competition. . . . . . . . . . . 4.2.4 Oligopoly . . . . . . . . . . . . . . . . . . . . . . . . 4.3 A Framework for Policy Analysis: SCP . . . . . 4.3.1 Market structure . . . . . . . . . . . . . . . . . . 4.3.2 Conduct. . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.3 Performance . . . . . . . . . . . . . . . . . . . . . . 4.3.4 Public policy . . . . . . . . . . . . . . . . . . . . . . 4.3.5 Limitations of SCP framework . . . . . 4.4 Rise of the Sharing Economy . . . . . . . . . . . . . . 4.5 Conclusions and Policy. . . . . . . . . . . . . . . . . . . .

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Strategic Pricing in Tourism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 5.2 CostBased Pricing Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 5.2.1 Costplus (markup) pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 5.2.2 Pricing for profit maximization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5.2.3 Marginal cost pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 5.2.4 Peak load pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

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MarketBased Pricing Strategies . . . . . 5.3.1 Price discrimination . . . . . . . . 5.3.2 Twopart tariff . . . . . . . . . . . . . 5.3.3 Price skimming . . . . . . . . . . . . 5.3.4 Penetration pricing . . . . . . . . . 5.3.5 Loss leader pricing . . . . . . . . . . 5.3.6 Promotional pricing. . . . . . . . . 5.3.7 Bundling . . . . . . . . . . . . . . . . . . CompetitionBased Pricing . . . . . . . . . 5.4.1 Price leadership . . . . . . . . . . . . 5.4.2 Predatory pricing . . . . . . . . . . . 5.4.3 Transfer pricing . . . . . . . . . . . . NonProfit Goals . . . . . . . . . . . . . . . . . Conclusions and Policy. . . . . . . . . . . . .

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Tourism Forecasting 6Forecasting Tourism Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 The Forecasting Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Challenges to Tourism Forecasting. . . . . . . . . . . . . . . . . . . . . . . 6.4 Forecasting Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Quantitative Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.1 Time series approaches to forecasting. . . . . . . . . . . . . . 6.5.2 Econometric (causal) approaches to forecasting . . . . . 6.6 Qualitative Approaches to Forecasting . . . . . . . . . . . . . . . . . . . 6.7 A Hybrid or Integrative Approach . . . . . . . . . . . . . . . . . . . . . . . 6.8 The Future: Artificial Intelligence Approaches. . . . . . . . . . . . . 6.9 Conclusions and Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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130 131 138 139 141 142 143 146 149 149 151 152 152 153

159 159 160 160 163 165 165 172 178 179 184 186

Tourism’s Economic Contribution and Economic Impacts 7The Economic Contribution of Tourism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193 7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 7.2 Tourism Increased Sales Revenues for TourismRelated Businesses. . . . . . 193 7.2.1 Effects of increased inbound tourism expenditure on domestic tourism supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 7.3 Tourism Stimulates Local Production and Output . . . . . . . . . . . . . . . . . . . . 198 7.3.1 Direct effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 7.3.2 Indirect effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 7.3.3 Induced effects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 7.3.4 Leakages from imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

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7.4 Tourism Creates New Employment Opportunities . . . . . . . . . . . . . . . . . . . 201 7.5 Tourism Generates Foreign Exchange Earnings . . . . . . . . . . . . . . . . . . . . . 202 7.5.1 Gross versus net foreign exchange effects . . . . . . . . . . . . . . . . . . . . 204 7.6 Tourism Creates New Investment Opportunities . . . . . . . . . . . . . . . . . . . . . 205 7.7 Tourism Increases Government Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 7.8 Tourism Assists Regional Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 7.9 NonEconomic Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 7.10 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

Measuring Economic Contribution: Tourism Satellite Accounts. . . . . 8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Need for Improved Statistical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 What is a Tourism Satellite Account? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 TSA and the ‘Tourism Industry’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Constructing the TSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Direct Versus Indirect Economic Contribution of Tourism . . . . . . . . . 8.7 The Importance of TSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 Regional TSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9 Updating TSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10 TSA as a Basis for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10.1 Measures of tourism yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10.2 Tourism productivity estimates . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10.3 Estimating the carbon footprint of tourism . . . . . . . . . . . . . . . . 8.11 Economic Contribution Versus Economic Impact. . . . . . . . . . . . . . . . . 8.12 Conclusions and Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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213 213 214 215 215 217 223 224 224 226 226 226 227 228 229 230

The Economic Impacts of Tourism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234 9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 9.2 The Purpose of Economic Impact Analysis (EIA). . . . . . . . . . . . . . . . . . . . 235 9.3 The Tourism Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 9.3.1 Multipliers based on inputoutput models . . . . . . . . . . . . . . . . . . . . 239 9.3.2 SAM multipliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 9.4 Factors Limiting Tourism’s Multiplier Effects. . . . . . . . . . . . . . . . . . . . . . . . 242 9.4.1 Factor supply constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242 9.4.2 Crowdingout effects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 9.4.3 Exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 9.4.4 Government fiscal policy stance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 9.5 EIA Using Computable General Equilibrium Modelling . . . . . . . . . . . . . . 245 9.6 Applications of CGE Modelling to Tourism . . . . . . . . . . . . . . . . . . . . . . . . . 247 9.6.1 Economic impacts of changes in inbound tourism . . . . . . . . . . . . . 247

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9.6.2 Economic impacts of tourism crises . . . . . . . . . . . . . . . . . . . . . . . . . 248 9.6.3 Tourism and poverty alleviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 9.6.4 Assessing tourism policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 9.6.5 Economic impacts of special events . . . . . . . . . . . . . . . . . . . . . . . . . 250 EIA and Policy Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 9.7.1 The importance of general equilibrium analysis . . . . . . . . . . . . . . . 251 9.7.2 Impacts are not benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 Conclusions and Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252

10Economic Evaluation of Special Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .257 10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 10.2 The Logic of Government Support for Special Events . . . . . . . . . . . . . . . . 258 10.3 Economic Evaluation of Special Events: General Issues . . . . . . . . . . . . . . . 260 10.3.1 Setting the boundaries of the host region for the event . . . . . . . . . 261 10.3.2 Estimating ‘new’ expenditure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 10.4 The Economic Impacts of an Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 10.5 Challenges to Common Practice Event Assessment Using Standard EIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 10.5.1 Event ‘multipliers’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 10.5.2 Relevance of the labour market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 10.5.3 Treatment of construction expenditure. . . . . . . . . . . . . . . . . . . . . . . 267 10.5.4 Treatment of taxes and subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 10.6 CGE Modelling of Special Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 10.6.1 Economic impact assessment of the Melbourne Formula One Grand Prix: An example of a CGE study . . . . . . . . . . . . . . . . . . . . . 272 10.7 Wider Effects of Special Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 10.8 CostBenefit Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 10.8.1 Costbenefit assessment of the Melbourne Formula One Grand Prix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 10.9 Beyond Economic Aspects: Holistic Event Evaluation . . . . . . . . . . . . . . . . 281 10.9.1 An essential role for CGE modelling . . . . . . . . . . . . . . . . . . . . . . . . 282 10.9.2 An essential role for CBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 10.9.3 Treatment of noneconomic impacts. . . . . . . . . . . . . . . . . . . . . . . . . 283 10.10 Conclusions and Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286

Tourism Investment and Taxation 11Investment by Tourism Firms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .293 11.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293 11.2 Categories of Private Tourism Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 294 11.2.1 Gross versus net investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

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