Edited by Larry Dwyer and Peter Forsyth
Chapter 7: Pricing Principles for Natural and Cultural Attractions in Tourism
John Loomis and Kreg Lindberg Importance of pricing in tourism and cultural resource management Many unique natural and cultural heritage attractions are owned by public or non-governmental organizations (rather than businesses). The very decision to retain these attractions in public ownership suggests that proﬁtmaximizing pricing such as a private ﬁrm would pursue may not meet the objectives of public ownership. Public pricing goals often involve recovery of at least some of the management costs, while keeping sites aﬀordable to allow for public exposure to the natural or cultural heritage. Thus a wider range of factors may aﬀect the pricing decision in public agencies and nonproﬁt organizations than in the private sector. This chapter will ﬁrst describe economic approaches to pricing, then alternative approaches that are driven by economic (for example, decreasing production costs) or non-economic (for example, revenue requirements, social equity) considerations. Even when non-economic goals aﬀect the pricing decision, economic principles can guide the decision. For example, if pricing is used to reduce negative ecological or congestion impacts, it is necessary to know the price responsiveness of demand to calculate the magnitude of a price increase needed to reduce visitation levels to a target amount. Also there are economic and recreation management consequences of pricing policies sensitive to social equity concerns (for example, low prices may result in overuse or excess demand, necessitating supplemental non-pricing rationing). We draw upon the relevant portions of the general public sector pricing literature (Layard and Walters 1978, among...
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