‘Should I stay or should I go?’: Weather forecasts and the economics of ‘short breaks’

• Lorenzo Zirulia ^[1]
  1. [1] University of Bologna

     University of Bologna

     Bolonia, Italia

     
• Localización: Tourism economics: the business and finance of tourism and recreation, ISSN 1354-8166, Vol. 22, Nº. Extra 4, 2016 (Ejemplar dedicado a: Spatial and sectorial impact studies in tourism ), págs. 837-846
• Idioma: inglés
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• Resumen

  • The aim of this article is to model the decisions of tourists and a monopolist firm when weather forecasts are available. Before deciding whether to go on holiday or not, but after the firm has decided and posted its price, tourists can look at weather forecasts. Our results show that the price chosen by the firm and the corresponding equilibrium profit are decreasing as a function of the accuracy of weather forecasts. Consumers, instead, are better off, the more accurate weather forecasts become. Managerial and policy implications are also derived.