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Modelling substitution between domestic and outbound tourism in Australia: A system-of-equations approach
Institution:1. Department of Econometrics and Business Statistics, Monash University, 900 Dandenong Road, Caulfield East, Victoria 3145, Australia;2. Faculty of Life and Social Sciences, Swinburne University of Technology, Australia;3. School of Hospitality and Tourism Management, University of Surrey, Guildford, UK;4. School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hong Kong;5. Tourism Research in Economic Environs and Society, North-West University, South Africa;1. Department of Statistical Sciences, University of Bologna, Via Belle Arti 41, Bologna 40126, Italy;2. Center for Advanced Studies in Tourism, University of Bologna, Campus of Rimini, P.tta Teatini 10, Rimini 47921, Italy;3. Department of Economics, Business and Statistics, University of Palermo, V.le delle Scienze Ed. 13, Palermo 90128, Italy;1. School of Business, Yonsei University, South Korea;2. School of Business Management, Faculty: Economic and Management Sciences, North-West University, South Africa;3. Department of Hospitality and Tourism Management, Pamplin College of Business, Virginia Polytechnic Institute and State University, USA;4. Department of Marketing, Pamplin College of Business, Virginia Polytechnic Institute and State University, USA;1. Strathclyde Business School, University of Strathclyde, Glasgow, UK;2. School of Management and Languages, Heriot-Watt University, Edinburgh, UK;3. Franklin Templeton Investment, 5 Morrison St, Edinburgh, UK
Abstract:This study uses a system-of-equations approach to model the substitution relationship between Australian domestic and outbound tourism demand. A new price variable based on relative ratios of purchasing power parity index is developed for the substitution analysis. Short-run demand elasticities are calculated based on the estimated error correction almost ideal demand systems. The empirical results reveal significant substitution relationships between Australian domestic tourism and outbound travel to Asia, the UK and the US. This study provides scientific support for necessary policy considerations to promote domestic tourism further.
Keywords:Domestic tourism  Substitution  Almost ideal demand system  Purchasing power parity  Australia
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