Economics of Tourism and Hospitality : A Micro Approach (Paperback)

MODULE 1: THE MARKET CHAPTER 1 ECONOMIC APPROACH TO TOURISM AND HOSPITALITY 1.1 Tourism and Hospitality 1.1.1 The making of modern tourism 1.1.2 The essence of hospitality 1.1.3 Tourism versus hospitality 1.2 Breadth and Depth of Tourism and Hospitality 1.2.1 Breadth of the tourism industry 1.2.2 Depth of the tourism industry 1.2.3 Supply expansion in tourism and hospitality 1.3 The Tourist and the Tourist Economy 1.3.1 Tourism and the tourist 1.3.2 Tourism consumption 1.3.3 Global tourism growth and distribution 1.4 Economic Significance of Tourism Summary Review Questions Problem Solving References CHAPTER 2 DEMAND, SUPPLY, AND THE MARKET 2.1 Economic Thinking 2.2 Equilibrium Analysis 2.2.1 Laws of demand and supply 2.2.2 Market equilibrium 2.2.3 Demand and supply versus quantity demanded and supplied 2.3 Economic Surplus and Market Efficiency 2.3.1 Consumer surplus, producer surplus, and social surplus 2.3.2 Price controls and deadweight loss 2.3.3 Market efficiency 2.4 Determinants of Demand and Supply 2.4.1 Push factors versus pull factors 2.4.2 Demand drives supply 2.4.3 Supply creates demand Summary Review Questions Problem Solving References CHAPTER 3 UBER’S SURGE PRICING AND MARKET EFFICIENCY 3.1 What is a Surge in Demand 3.2 How Does Surge Pricing Work 3.2.1 Riders, drivers, and surge multiplier 3.2.2 Surge pricing works 3.2.3 Surge pricing fails 3.3 Welfare Analysis of Surge Pricing 3.3.1 Economic surplus 3.3.2 Empirical evidence 3.4 Information, Price Signal, and Market Efficiency 3.4.1 Surge multiplier as the price signal 3.4.2 "The use of knowledge in society" Summary Problem Solving References MODULE 2: DEMAND CHAPTER 4 CONSUMER CHOICE AND DEMAND 4.1 The Economic Problem 4.2 Utility, Preference and Indifference Curve 4.2.1 Utility and diminishing marginal utility 4.2.2 Consumption bundle and preference relation 4.2.3 Indifference curve 4.3 Budget Constraint and Consumer Optimization 4.3.1 Budget line 4.3.2 Consumer optimization 4.3.3 Equalization of marginal utility per dollar 4.4 Derivation of the Demand Curve 4.4.1 Consumer optimization and the demand curve 4.4.2 Properties of the demand curve 4.4.3 Demand functions 4.5 The Work-Leisure Tradeoff 4.5.1 Substitution effect 4.5.2 Income effect 4.5.3 Opportunity cost of leisure Summary Review Questions Problem Solving References CHAPTER 5 ELASTICITY OF CONSUMER DEMAND 5.1 The Responsiveness of Demand 5.2 Defining and Calculating Elasticity 5.2.1 Arch elasticity 5.2.2 Midpoint elasticity 5.2.3 Point elasticity 5.3 Interpretation of Elasticity 5.3.1 Nature of the effect 5.3.2 Magnitude of the effect 5.4 Major Elasticities of Demand 5.4.1 Price elasticity of demand 5.4.2 Income elasticity of demand 5.4.3 Cross-price elasticity of demand 5.5 Price Elasticity and Firm Revenue 5.5.1 Price elasticity of linear demand 5.5.2 Price elasticity and firm revenue Summary Review Questions Problem Solving References CHAPTER 6 NETWORK EFFECTS IN MARKET DEMAND 6.1 Individual Demand versus Market Demand 6.1.1 Additivity in market demand 6.1.2 Demand interdependence and non-additivity 6.1.3 Network externality and network effects 6.2 Network Effects and Market Demand 6.2.1 Bandwagon effect 6.2.2 Snob effect 6.2.3 Veblen effect 6.3 Nonfunctional Demand and Utility 6.3.1 Functional demand versus nonfunctional demand 6.3.2 Functional utility versus nonfunctional utility 6.4 Consumer Belief and Information Cues Summary Review Questions Problem Solving References CHAPTER 7 DEMAND FOR PINOT NOIR VERSUS MERLOT: THE "SIDEWAYS" EFFECT 7.1 Sideways and the Wines 7.2 Sideways on Wine Consumption 7.2.1 Standardization and comparisons 7.2.2 The Sideways effect on quantity 7.2.3 The Sideways effect on price 7.3 Decomposing the Price and Sideways Effects 7.3.1 Change in price or quantity 7.3.2 Changes in both price and quantity 7.3.3 Associations 7.4 Consumer Knowledge and the Sideways Effect 7.4.1 Consumer knowledge and wine consumption 7.4.2 Heterogeneity of the Sideways effect Summary Problem Solving References MODULE 3: SUPPLY CHAPTER 8 FIRM PRODUCTION AND COST 8.1 Production Function 8.1.1 Capital and labor 8.1.2 Diminishing marginal product 8.2 Derivation of Cost Curves 8.2.1 Cost structure 8.2.2 Cost concepts 8.2.3 Cost curves 8.3 Cost and Short-Run Production 8.3.1 Revenue, cost, and profit 8.3.2 Breakeven point 8.3.3 Firm optimization 8.4 Cost and Long-Run Production 8.4.1 Long-run average cost 8.4.2 Economies of scale 8.4.3 Why do economies of scale arise Summary Review Questions Problem Solving References CHAPTER 9 COMPETITION AND MARKET STRUCTURE 9.1 Market Structure in a Nutshell 9.1.1 What is market structure 9.1.2 Market structures in tourism and hospitality 9.2 Perfect Competition 9.2.1 Market demand versus firm demand 9.2.2 Positive profit, zero profit, and shutdown 9.2.3 Derivation of the supply curve 9.3 Monopoly 9.3.1 Downward-sloping demand curve 9.3.2 Marginal revenue curve 9.3.3 Output and price decision 9.4 Monopolistic Competition 9.4.1 Product differentiation and demand 9.4.2 Monopolistic competition in the long run 9.5 Oligopoly 9.5.1 Strategic competition 9.5.2 Duopoly and Bertrand competition 9.5.3 Market efficiency Summary Review Questions Problem Solving References CHAPTER 10 MARKET CONCENTRATION AND MARKET POWER 10.1 Market Definition and Market Boundary 10.1.1 Market boundary by product 10.1.2 Market boundary by location 10.1.3 Market concentration and market power 10.2 Measuring Market Concentration 10.2.1 Four-firm concentration ratio 10.2.2 Herfindahl-Hirschman Index 10.2.3 Lorenz curve 10.3 Measuring Market Power 10.3.1 Lerner index and price elasticity of demand 10.3.2 Lerner index and demand substitutability 10.4 Industry versus Sector 10.4.1 The complementary nature of the tourism industry 10.4.2 Market concentration in tourism and hospitality Summary Review Questions Problem Solving References CHAPTER 11 AIRBNB VERSUS HOTEL IN SUPPLY ADJUSTMENT 11.1 Performance Metrics in the Lodging Industry 11.1.1 Supply and demand 11.1.2 Occupancy, ADR and RevPAR 11.2 Discrepancy in Market Performance 11.2.1 Airbnb ADR and occupancy are stationary 11.2.2 Airbnb ADR and occupancy are lower 11.3 Demand Seasonality and Supply Adjustment 11.3.1 Supply adjustment 11.3.2 Demand seasonality and market equilibrium 11.3.3 Cost and host behavior of Airbnb 11.4 Competition in the Lodging Industry Summary Problem Solving References MODULE 4: FIRM BEHAVIOR AND STRATEGY CHAPTER 12 MONOPOLY AND PRICE DISCRIMINATION 12.1 Price Discrimination versus Uniform Pricing 12.1.1 Uniform pricing of a monopolist 12.1.2 What is price discrimination 12.2 Third-Degree Price Discrimination 12.2.1 Demand heterogeneity by consumer segment 12.2.2 Pricing on consumer segments 12.2.3 Discontinuity in market demand 12.3 Second-Degree Price Discrimination 12.3.1 Block selling and diminishing marginal utility 12.3.2 Pricing on sale blocks 12.3.3 Welfare analysis 12.4 First-Degree Price Discrimination 12.4.1 Pricing on individuals 12.4.2 Social optimum and market efficiency 12.4.3 An example of first-degree price discrimination 12.5 Market Imperfection, Information, and Price Discrimination 12.5.1 Price discrimination and market efficiency 12.5.2 Information acquisition about demand 12.5.3 Economic discrimination versus social discrimination Summary Review Questions Problem Solving References CHAPTER 13 STARBUCKS PRICING: TALL, GRANDE, AND VENTI 13.1 Receptacle Size and Price Tag 13.2 Second-Degree Price Discrimination 13.2.1 How does it work 13.2.2 Why the Tall is the optimal single size 13.2.3 Optimal sizes and prices for Grande and Venti 13.3 Third-Degree Price Discrimination 13.3.1 How does it work 13.3.2 Nonfunctional utility and elasticity of demand 13.3.3 Elasticity of demand across sizes 13.4 Rationality versus Irrationality Summary Problem Solving References CHAPTER 14 DUOPOLY AND PRODUCT DIFFERENTIATION 14.1 Horizontal versus Vertical Product Differentiation 14.2 Minimum Product Differentiation 14.2.1 Assumptions of the model 14.2.2 Location choice and price competition 14.2.3 Law of minimum product differentiation 14.3 Maximum Product Differentiation 14.3.1 What is maximum product differentiation 14.3.2 Equilibrium prices in maximum product differentiation 14.3.3 Sources of firm profit 14.4 Consumer Preference and Product Differentiation 14.4.1 Dispersion of consumer preference 14.4.2 Intensity of consumer preference 14.4.3 Product differentiation beyond location 14.5 Product Differentiation and Market Efficiency Summary Review Questions Problem Solving References CHAPTER 15 MCDONALD’S VERSUS BURGER KING IN PRODUCT DIFFERENTIATION 15.1 Firms in the Fast Food Industry 15.2 Location Affecting Price and Profit 15.2.1 McDonald’s price and profit 15.2.2 Burger King’s price and profit 15.2.3 McDonald’s versus Burger King in pricing 15.3 Competition and Location Choice 15.3.1 McDonald’s responds to Burger King’s location 15.3.2 Burger King responds to McDonald’s location 15.4 What Affects Location Equilibrium 15.4.1 Firm asymmetry and location choice 15.4.2 Market size, the "center," and location choice Summary Problem Solving References MODULE 5: TRANSACTION AND INSTITUTION CHAPTER 16 INTERMEDIATION AND THE BID-ASK SPREAD 16.1 Transaction Cost and the Firm 16.1.1 Walrasian auction and transaction cost 16.1.2 The firm and the intermediary 16.2 Bilateral Search versus Intermediation 16.2.1 Buyers and sellers 16.2.2 Bilateral search 16.2.3 Intermediation 16.3 Determining the Bid-Ask Spread 16.3.1 Search costs and intermediary profit 16.3.2 Bid-ask spread without search 16.3.3 Bid-ask spread with search 16.4 Intermediation versus Disintermediation 16.4.1 The emergence of travel intermediaries 16.4.2 Disintermediation Summary Review Questions Problem Solving References CHAPTER 17 THE TWO-SIDED MARKET AND PRICE STRUCTURE 17.1 Externality and the Platform 17.1.1 A descriptive framework 17.1.2 Cross-side network externality 17.2 What Makes a Two-Sided Market 17.2.1 The implicit market for interactions 17.2.2 Demands for the platform 17.2.3 Defining two-sidedness 17.3 Price Decision of the Platform 17.3.1 Profit maximization 17.3.2 Implicit price of interactions 17.3.3 Price structure on two sides 17.4 The Coase Theorem and Platformization 17.4.1 The failure of the Coase theorem 17.4.2 Internalization of externality Summary Review Questions Problem Solving References CHAPTER 18 THE PLATFORMIZATION OF OPENTABLE 18.1 What is OpenTable 18.2 OpenTable as a Platform 18.2.1 The platform 18.2.2 Cross-side network effects 18.2.3 Same-side network effects 18.3 Structure of Fees and User Response 18.3.1 Structure of fees 18.3.2 Restaurant’s response 18.3.3 Diner’s response 18.4 Firm Revenue and Growth 18.5 Platform Competition and Multi-Homing Summary Problem Solving References