We present an economic analysis of typically incomplete tourism contracts regulating the business relationship between Tour Operators and Hotels which are Allotment and Free Sale contracts. Starting with an “optimal contract design” approach, we discuss the analytical solution of the optimal choices in a framework of uncertainty for both Tour Operators and Hotels. Three questions are specifically addressed: (i) how Tour Operators and Hotels choose the optimal contract terms (quantity and price); (ii) which is the “optimal risk sharing” rule, for the Allotment contract; (iii) which is the “optimal risk allocation” rule, for the Free Sale contract. Finally, we compare the two contracts in terms of their overall efficiency and Pareto Optimality.

An Economic Analysis of the Tourism Contract: Allotment and Free Sale

CASTELLANI, MASSIMILIANO;MUSSONI, MAURIZIO
2007

Abstract

We present an economic analysis of typically incomplete tourism contracts regulating the business relationship between Tour Operators and Hotels which are Allotment and Free Sale contracts. Starting with an “optimal contract design” approach, we discuss the analytical solution of the optimal choices in a framework of uncertainty for both Tour Operators and Hotels. Three questions are specifically addressed: (i) how Tour Operators and Hotels choose the optimal contract terms (quantity and price); (ii) which is the “optimal risk sharing” rule, for the Allotment contract; (iii) which is the “optimal risk allocation” rule, for the Free Sale contract. Finally, we compare the two contracts in terms of their overall efficiency and Pareto Optimality.
2007
ADVANCES IN MODERN TOURISM RESEARCH
51
85
Castellani M.; Mussoni M.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/32093
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