Analysis of Tourism Demand Model Across European Source Countries

Abstract

We estimate a linear approximation almost ideal demand system model for European tourism. Tourist source countries are Germany and UK. German and UK tourists travel to Euro countries and non-Euro countries. Euro countries are France, Italy, and Austria, and non-Euro countries are Switzerland, Denmark, and Poland. We derive income and price elasticities of tourism demand. British tourists are more sensitive to prices among Euro host countries than German tourists possibly due to transaction costs. Germans substitute between Euro host countries but non-Euro host countries are both substitutes and compliments for German tourists.