Measuring the Effects of Tourists' Relative Willingness to Spend and Third-degree Price Discrimination on Inbound Tourism Expenditure Differentials

Keywords

conditional quantile regression; decomposition analysis; price discrimination; segmentation; tourism expenditure differentials

Abstract

Tourism expenditures are determined by a set of antecedents that reflect tourists' willingness and ability to spend, and de facto incremental monetary outlays at which willingness and ability is transformed into total expenditures. Based on the neoclassical theoretical argument of utility-constrained expenditure minimization, we extend the current literature by applying a sustainability-based segmentation criterion, namely, the Legatum Prosperity IndexTM to the decomposition of a total expenditure differential into tourists' relative willingness to spend and an upper bound of third-degree price discrimination, using mean-level and conditional quantile estimates. Our results indicate that understanding the price–quantity composition of international inbound tourism expenditure differentials assists agents in the tourism industry in their quest for profit maximization.

Publication Date

12-2022

Original Citation

Alfarhan, U. F., Nusair, K., Al-Azri, H., Al-Muharrami, S., & Hua, N. (2022). Measuring the effects of tourists’ relative willingness to spend and third-degree price discrimination on inbound tourism expenditure differentials. Tourism Economics, 28(8), 2126–2153. https://doi.org/10.1177/13548166211030016

Document Type

Paper

Language

English

Source Title

Tourism Economics

Volume

28

Issue

8

College

Rosen College of Hospitality Management

Location

Rosen College of Hospitality Management

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