ABSTRACT
We consider an economy producing only one kind of good (tourism services) which is supplied in an international tourism market in which a large number of tourism economies participate. Tourism services are only sold to non-residents. The production of tourism services implies the building of facilities and the training of human capital in order to make these facilities work. Tourism production is given by the following function
T k AktS t t( ) = η (5.1) This supply function is a neoclassical production function. k is the stock of facilities and of human capital while, for the moment, we simply take A as a scale parameter. In section 5.5 we will propose an interpretation of A in terms of intensity in the utilization of tourism facilities. In any case, an increase in A allows the economy to produce more tourism services with the same stock of capital. η is a parameter reflecting the elasticity of tourism supply with respect to capital. For simplicity, we consider that tourism supply is inelastic with respect to price.
