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Third-degree price discrimination in a short-stay accommodation industry

Marsden, A and Sibly, H ORCID: 0000-0003-0271-7710 2017 , 'Third-degree price discrimination in a short-stay accommodation industry' , Applied Economics, vol. 49, no. 51 , pp. 5166-5182 , doi: 10.1080/00036846.2017.1302063.

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Abstract

This article analyses the pricing in the short-stay accommodation industry in Tasmania. It utilizes a novel 2008 survey of Tasmanian short-stay accommodation firms in which business managers were asked about their perception of the elasticity of their firm’s demand in each of the market segments that their firm supplied. This direct observation of elasticity allows us to demonstrate that firms’ price across market segments act in a manner consistent with the Lerner index and the theory of third-degree price discrimination. Further we show, in line with expectations based on the literature, that increased quality of the accommodation lowers the elasticity of demand, while the elasticity of demand is higher in winter. Surprisingly, Internet sales channels do not exhibit a different elasticity of demand to other sales channels.

Item Type: Article
Authors/Creators:Marsden, A and Sibly, H
Keywords: pricing, discrimination, elasticity, tourism
Journal or Publication Title: Applied Economics
Publisher: Routledge Taylor & Francis Ltd
ISSN: 0003-6846
DOI / ID Number: 10.1080/00036846.2017.1302063
Copyright Information:

Copyright 2017 Informa UK Limited, trading as Taylor & Francis Group

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