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International Handbook on the Economics of Tourism

Edited by Larry Dwyer and Peter Forsyth

This highly accessible and comprehensive Handbook presents a cutting edge discussion of the state of tourism economics and its likely directions in future research. Leading researchers in the field explore a wide range of topics including: demand and forecasting, supply, transport, taxation and infrastructure, evaluation and application for policy-making. Each chapter includes a discussion of its relevance and importance to the tourism economics literature, an overview of its main contributions and themes, a critical evaluation of existing literature and an outline of issues for further conceptual and applied research.
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Chapter 7: Pricing Principles for Natural and Cultural Attractions in Tourism

John Loomis and Kreg Lindberg


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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