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Juan Gabriel Brida and Stefan Franz Schubert
 
''THE ECONOMIC EFFECTS OF ADVERTISING ON TOURISM DEMAND''
( 2008, Vol. 6 No.45 )
 
 
In this paper we introduce a dynamic model to study the macroeconomic effects of advertising activities in tourism. The agents of the model are a representative consumer which optimize their intertemporal welfare, a representative firm that produces tourism services, an authority which organizes tourism advertising abroad and foreigner tourists. We show that in the short run, an increase in marketing expenditures raises foreigner's tourism demand, leads to an increase in the relative price of tourism services, makes tourism production more attractive and stimulates capital investment. As time passes, the capital stock increases and tourism production expands, leading to a falling price of tourism. In the long run, the increase in marketing activities results in a higher rate of tourism production, a higher capital stock, a lower relative price of tourism services and a reduction of net foreign assets.
 
 
Keywords:
JEL: F4 - Macroeconomic Aspects of International Trade and Finance: General
L8 - Industry Studies: Services: General
 
Manuscript Received : Oct 07 2008 Manuscript Accepted : Oct 16 2008

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