Modeling Japanese Tourism Demand for Asian Destinations: A Dynamic AIDS Approach

This paper investigates the expenditure allocation of Japanese international tourism in its five major Asian destinations, China, Hong Kong, Korea, Taiwan, and Thailand. The dynamic of linear approximation the almost ideal demand system is used to determine the long-run equilibrium while the short-run dynamics are represented by an error correction mechanism. The empirical results indicate that the changes in market shares of Japanese outbound tourism are significantly influenced by the changes in tourists' expenditure, rather than the changes in relative tourism prices. The results show that Japan expenditure rises, the market share of Taiwan and Thailand declines, while Korea benefits. In addition, price competitiveness is important for Japanese demand for Korea, but is relatively unimportant for the other destinations.