Why elasticities from demand models using different dependent variables should not be compared

Abstract

ABSTRACT Tourism demand modelling is one of the most recurrent topics in tourism economics literature. However, difficulties in defining tourism as a product have led to different ways of capturing the concept of tourism demand. In this paper, the main measures used in relevant empirical literature are considered, relating them from a theoretical point of view and analysing the empirical consequences and comparability of each one's use on the elasticity values of the determinants. Special attention is paid to the price elasticity when tourism demand models, based on tourism expenditures or receipts, are compared with those that use the number of tourists. The results show that different demand measures can lead to different estimated elasticity values that are not comparable. Furthermore, in the specific case of the price elasticity, the divergence in the estimated elasticity value of the different models can be quantified.