Economics of Domestic Tourism: A Study of Australian Demand for Tourism Goods and Services

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Divisekera, Sarath (2009) Economics of Domestic Tourism: A Study of Australian Demand for Tourism Goods and Services. Tourism Analysis, 14 (3). pp. 279-292. ISSN 1083-5423


This study analyzes the economic determinants of domestic demand for tourism goods and services by Australians in a preference-consistent utility maximization framework. A system of demand equations based on the almost ideal demand system, which incorporates seasonality, is estimated using tourist consumption data collected through quarterly national visitor surveys. The system consists of five commodity aggregates: accommodation, food, transportation, shopping, and entertainment. The estimated model obeys the basic postulates of consumer theory, homogeneity, and symmetry. The results indicate that demands are price inelastic while income elasticities varied significantly in magnitude across the commodity aggregates. It was also observed that the demands for the five commodity aggregates are complementary, implying that tourists’ overall utility depends on the joint consumption of a bundle of goods and services. The observed price inelastic demand coupled with the apparent complementarity of demands across the consumption bundle may be reflective of the possibility that latent price sensitivity is associated with tourist demand.

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Item type Article
DOI 10.3727/108354209789704940
Official URL
Subjects Historical > Faculty/School/Research Centre/Department > School of Economics and Finance
Historical > FOR Classification > 1402 Applied Economics
Historical > FOR Classification > 1506 Tourism
Historical > SEO Classification > 9099 Other Commercial Services and Tourism
Keywords ResPubID18067. Australian domestic tourism demand, almost ideal demand systems, homogeneity and symmetry restrictions, consumer behaviour, Australia
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