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PRESERVATION OF ENVIRONMENTAL QUALITY AND TOURIST
INVESTMENTS #

Juan G. Brida a *, Edgar J. Sanchez Carrera b, Elvio Accinelli c

a Free University of Bolzano, School of Economics and Management, Bolzano, Italy,
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b Department of Economics, University of Siena, Italy, e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
c Universidad Autónoma de San Luis Potosi, San Luis Potosi, México, e-mail:
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* Corresponding author

Abstract

We develop a theoretical model to analyze the incentives for hotel chains to make environmentally friendly investments. We show that the level of investment of hotel chains to improve the environmental quality of a tourist destination depends positively on two factors: tourist demand and the level of aggregate income. The framework is based on a model of horizontal differentiation à la Hotelling. By introducing a demand function for tourist commodities, we show that an increase in total income encourages hotel chains in the regions with higher demand to invest on environmental quality.