Edited by Larry Dwyer and Peter Forsyth
Chapter 4: Structure Conduct Performance and Industrial Organisation in Tourism
Brian Davies and Paul Downward Introduction Tourism is invariably referred to as the world’s largest industry.1 Yet it is also a risky business venture subject to a highly volatile business environment. Such volatility has been examined in terms of the inﬂuence of tourism demand.2 What has received little attention is the supply environment. Any analysis requires at least some discussion of the generality of competition involved. From a microeconomic perspective, the supply of tourism can be understood in terms of the models and concepts developed and reﬁned in the structure conduct and performance paradigm (SCP) and, relatedly, the industrial organisation (IO) literatures. To provide a critical overview and assessment of the relevance of these concepts, and thus put forward a balanced insight into the main issues that the literature reveals is, in many respects, an ambition that cannot be adequately addressed in one chapter. On the one hand, the SCP and IO literature is immense. On the other, tourism is such a wide-ranging concept that it has yet to ﬁnd one accepted deﬁnition, for example, in oﬃcial statistics, so the deﬁnition of supply is accordingly ﬂuid (Allin 2005). Facing up to these constraints, this chapter draws upon the authors’ previous research in the travel agency/tour operations business and hotels to provide what we feel are key issues that need further investigation and reﬁnement, and which could have application to sectors other than those discussed. The next section begins the discussion by indicating the scale...
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