Private and Public Incentive to Reduce Seasonality: A Theoretical Model

21 Pages Posted: 10 Mar 2012

See all articles by Roberto Cellini

Roberto Cellini

University of Catania - Department of Economics and Business

Giuseppe Rizzo

Centre for Strategic and Policy Studies (CSPS); University of Catania - Department of Economics and Quantitative Methods

Date Written: 2012

Abstract

This paper presents a theoretical model to investigate the incentive of private producer and policymaker to reduce seasonality in a given market, where consumers derive different utilities from the consumption of the good in different seasons. The (seasonal) product differentiation is modelled along the lines of the contributions of Gabszewicz and Thisse (Price Competition, Quality and Income Disparities, 1979) and Shaked and Sutton (Relaxing Price Competition through Product Differentiation, 1982). The authors take into consideration that investments are possible to reduce the degree of seasonality. They show that, for a wide set of parameter configuration, the policy maker finds it optimal to make more effort to reduce seasonality as compared to private producers. The theoretical conclusion is consistent with empirical and anecdotical evidence, especially in the field of tourism markets.

Keywords: seasonality, tourism, public spending

JEL Classification: D29, L12, L83

Suggested Citation

Cellini, Roberto and Rizzo, Giuseppe, Private and Public Incentive to Reduce Seasonality: A Theoretical Model (2012). Economics Discussion Paper No. 2012-16, Available at SSRN: https://ssrn.com/abstract=2019379 or http://dx.doi.org/10.2139/ssrn.2019379

Roberto Cellini (Contact Author)

University of Catania - Department of Economics and Business ( email )

Corso Italia 55
95129 Catania, 95129
Italy
+390957537728 (Phone)
+390957537710 (Fax)

Giuseppe Rizzo

Centre for Strategic and Policy Studies (CSPS) ( email )

Simpang 347
Jalan Pasar Baru
Gadong, Brunei Muara BE1318
Brunei
+6732445841 (Phone)

HOME PAGE: http://www.csps.org.bn

University of Catania - Department of Economics and Quantitative Methods ( email )

Corso Italia, 55
95129 Catania
Italy

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