Tourism, globalization, social externalities, and domestic welfare |
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Authors: | Chi-Chur Chao Bharat R Hazari Pasquale M Sgro |
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Institution: | a Department of Economics, Chinese University of Hong Kong, Shatin, Hong Kong;b Deakin Business School, Deakin University, Malvern, Victoria 3144, Australia |
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Abstract: | One of the impacts of globalisation has been the growth in tourism and mobility of capital. This paper examines the welfare effect of tourism on the host economy with imperfect competition. Three channels that affects domestic welfare by tourism are: social externalities accompanied with tourists, the terms of trade effect via rises in the non-tradable prices, and the resource movement effect to the manufacturing sector. Owing to the positive terms-of-trade effect and/or the beneficial resource movement effect, the optimal levels of tourism occur at the situations that tourists bring negative social externalities to the economy. |
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Keywords: | Tourism Globalization Social externalities |
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