Third-degree price discrimination in a short-stay accommodation industry
journal contribution
posted on 2023-05-19, 03:27authored byMarsden, A, Sibly, H
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.
History
Publication title
Applied Economics
Volume
49
Issue
51
Pagination
5166-5182
ISSN
0003-6846
Department/School
TSBE
Publisher
Routledge Taylor & Francis Ltd
Place of publication
4 Park Square, Milton Park, Abingdon, England, Oxfordshire, Ox14 4Rn
Rights statement
Copyright 2017 Informa UK Limited, trading as Taylor & Francis Group