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Edited by Larry Dwyer and Peter Forsyth
Chapter 5: Industrial Economics and Pricing Issues within Tourism Enterprises and Markets
5 Industrial economics and pricing issues within tourism enterprises and markets Adrian O. Bull Importance of the issue The conventional view in economics that a product is a scarce good or service, and represents an output resulting from a production process, provides a starting deﬁnition for much of tourism. However, such a deﬁnition does not provide an adequate description of what constitutes a product from a consumer needs perspective, or an adequate speciﬁcation of the boundaries of a commodity class. In perfect competition, perfect homogeneity among a number of products automatically deﬁnes a commodity class, a market and an industry. In other cases, the boundaries of a commodity class may be deﬁned in theory by reference to the degree of substitutability between objects, but the less substitutable products are, the fuzzier the commodity class boundaries become. Tourism involves a huge range of products, only some of which are substitutable, and therefore the ‘market’ for tourism is in fact fragmented into markets for many products (Leiper 1995: 18–19). Nonetheless, there may be some substitutability between diﬀerent classes of tourism product; for example, a tourist may trade oﬀ expenditure for a poorer class of travel for better accommodation, or vice versa. The degree of substitutability and the cohesiveness of the purchasing group, determine the nature of the market structure within which tourism enterprises operate. Additionally, the tourism experience (product) involves a range of characteristics that may cause problems for a classical analysis of industrial economics...
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