Papers by Sarath Divisekera
Tourism Economics, Sep 5, 2018
This article analyzes the determinants of three types of innovation output—product, process, and ... more This article analyzes the determinants of three types of innovation output—product, process, and organizational, generated by Australian tourism firms. It examines how collaboration, human capital, information technology, funding, firm, and market characteristics impact innovation outcomes. Of the inputs, collaboration for innovation is the one with a positive impact on the three types of innovation outputs. Human capital also contributes to the innovation process. However, its impacts are strongly felt only in the generation of product and organizational innovation. Information and communication technology is vital to the implementation of operational process and organizational innovations, while funding influences the implementation of new operational processes. Of firm and market characteristics, foreign ownership, degree of competition, and firm size have significant impacts on innovation intensity among firms.
Chapters, 2012
Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly f... more Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly from consumer theory, there has been a continuing search for alternative specifications and functional forms. Many models have been proposed, but perhaps the most important in current use, apart from the original linear expenditure system, are the Rotterdam model (see Henri Theil, 1965, 1976; Anton Barten) and the translog model (see Laurits Christensen, Dale Jorgenson, and Lawrence Lau; Jorgen-son and Lau). Both of these models have been extensively estimated and have, in addition, been used to test the homogeneity and symmetry restrictions of demand theory. In this paper, we propose and estimate a new model which is of comparable generality to the Rotterdam and translog models but which has considerable advantages over both. Our model, which we call the Almost Ideal Demand System (AIDS), gives an arbitrary first-order approximation to any demand system; it satisfies the axioms of choice exactly; it aggregates perfectly over consumers without invoking parallel linear Engel curves; it has a functional form which is consistent with known household-budget data; it is simple to estimate, largely avoiding the need for non-linear estimation; and it can be used to test the restrictions of homogeneity and symmetry through linear restrictions on fixed parameters. Although many of these desirable properties are possessed by one or other of the Rotterdam or translog models, neither possesses all of them simultaneously. In Section I of the paper, we discuss the theoretical specification of the AIDS and justify the claims in the previous paragraph. In Section II, the model is estimated on postwar British data and we use our results to test the homogeneity and symmetry restrictions. Our results are consistent with earlier findings in that both sets of restrictions are decisively rejected. We also find that imposition of homogeneity generates positive serial correlation in the errors of those equations which reject the restrictions most strongly; this suggests that the now standard rejection of homogeneity in demand analysis may be due to insufficient attention to the dynamic aspects of consumer behavior. Finally, in Section III, we offer a summary and conclusions. We believe that the results of this paper suggest that the AIDS is to be recommended as a vehicle for testing, extending, and improving conventional demand analysis. This does not imply that the system, particularly in its simple static form, is to be regarded as a fully satisfactory explanation of consumers' behavior. Indeed, by proposing a demand system which is superior to its predecessors, we hope to be able to reveal more clearly the problems and potential solutions associated with the usual approach.
This article analyses the demand for Australian tourism goods and services by Australian househol... more This article analyses the demand for Australian tourism goods and services by Australian households distinguished by the state/region of origin. The necessary data for the exercise is obtained from the Australian National Visitor Surveys (NVS). These surveys collect/provide detailed consumption data of the domestic tourists travel both within and between the eight Australian geo-political regions. Analysis of the associated tourist consumption patterns was carried out using a theoretically consistent demand system and namely the Almost Ideal Demand System that incorporates seasonality. The 21 items of consumption expenditure data from the NVS were aggregated into five broad commodity groups representing the major consumables of tourists, viz. Accommodation, Food, Transportation, Shopping, and Entertainment. A total of nine demand systems were estimated, 8 regional models and one aggregate (national) model based on a pooled sample.
Tourism Economics, Dec 1, 2016
This article analyses the interdependency of demand for two of the leading traded services global... more This article analyses the interdependency of demand for two of the leading traded services globally: international travel (transportation) and international tourism. Based on the Almost Ideal Demand System, the study models transport and tourism demand simultaneously for a range of countries: Australia, New Zealand, the United States and the United Kingdom. Overall, tourism demand is found to be more expenditure and price-elastic than is the demand for transport services to the same destination. The cross-price elasticities indicate significant interdependencies of demand between transport and tourism, and between destinations. Overall, the cross-price elasticities confirm the complementarity between transport demand and tourism demand. However, in the cases of the UK demand for the United States and the US demand for the United Kingdom, substitutability between the two demand types is found.
Annals of tourism research en español, 2003
Australian Economic Papers, Jun 1, 1986
한국호텔외식경영학회 학술발표논문집, Jun 1, 2015
This paper models the economic determinants of demand for domestic tourism goods and services by ... more This paper models the economic determinants of demand for domestic tourism goods and services by Australians
Tourism Economics, Mar 1, 2010
This article analyses the economic determinants of demand for tourism goods and services by Austr... more This article analyses the economic determinants of demand for tourism goods and services by Australian households distinguished by the travel motives of leisure and non-leisure. Using tourist consumption data collected through quarterly national visitor surveys, two systems of demand equations are estimated, based on the almost ideal demand system and incorporating seasonality. The study aggregates itemized tourist expenditure data into five broad commodity groups: accommodation, food, transportation, shopping and entertainment. The estimated models obey the basic postulates of consumer theory – homogeneity and symmetry. Overall, demand for the five commodity aggregates is found to be price inelastic, while the degree of price sensitivity varies across the commodity aggregates and between the two types of tourists. In general, demand by leisure tourists is found to be more sensitive to price than demand by non-leisure tourists. The cross-price elasticities derived from both models reveal a gross complementarity of demand, implying that tourists' overall utility depends on the joint consumption of a bundle of goods and services. The observed price-inelastic demand, coupled with the apparent complementarity of demand, may reflect the possibility that latent price sensitivity is associated with tourist demand.
한국호텔외식경영학회 학술발표논문집, Jun 1, 2015
This paper examines the issue of taxing foreign tourists. In the spirit of conventional optimum t... more This paper examines the issue of taxing foreign tourists. In the spirit of conventional optimum tariff theory, a model of optimal pricing is developed by incorporating interdependencies of demand for international tourism with its counterpart international travel. The analysis demonstrates that the issue of rent extraction from foreign tourists—as a means of maximising national gains—is a complex one. The complication arises from the inherent complementarity of tourism demand with its counterpart, international travel. Consequently, one has to consider not only the demand for and the existing market structure of the sector targeted for taxation, but also that of the complementary sector. If the prevailing market structure of the two sectors is competitive, one of the sectors may be targeted for taxation and the rents associated with unique tourism attributes may be extracted efficiently. Given the diversity of demand from tourists of different origins, and the inability to discriminate between locals and foreigners, the most appropriate sector to be targeted for taxation appears to be the international aviation sector. In conclusion, this study demonstrates the need for careful consideration of existing market structures and cross-demand relationships between travel and tourism. If these are ignored and the tourism industry is subject to increasing taxes, the very objective of maximising gains from foreign tourism could itself be detrimental to this most successful, growing industry.
Edward Elgar Publishing eBooks, Aug 31, 2012
Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly f... more Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly from consumer theory, there has been a continuing search for alternative specifications and functional forms. Many models have been proposed, but perhaps the most important in current use, apart from the original linear expenditure system, are the Rotterdam model (see Henri Theil, 1965, 1976; Anton Barten) and the translog model (see Laurits Christensen, Dale Jorgenson, and Lawrence Lau; Jorgen-son and Lau). Both of these models have been extensively estimated and have, in addition, been used to test the homogeneity and symmetry restrictions of demand theory. In this paper, we propose and estimate a new model which is of comparable generality to the Rotterdam and translog models but which has considerable advantages over both. Our model, which we call the Almost Ideal Demand System (AIDS), gives an arbitrary first-order approximation to any demand system; it satisfies the axioms of choice exactly; it aggregates perfectly over consumers without invoking parallel linear Engel curves; it has a functional form which is consistent with known household-budget data; it is simple to estimate, largely avoiding the need for non-linear estimation; and it can be used to test the restrictions of homogeneity and symmetry through linear restrictions on fixed parameters. Although many of these desirable properties are possessed by one or other of the Rotterdam or translog models, neither possesses all of them simultaneously. In Section I of the paper, we discuss the theoretical specification of the AIDS and justify the claims in the previous paragraph. In Section II, the model is estimated on postwar British data and we use our results to test the homogeneity and symmetry restrictions. Our results are consistent with earlier findings in that both sets of restrictions are decisively rejected. We also find that imposition of homogeneity generates positive serial correlation in the errors of those equations which reject the restrictions most strongly; this suggests that the now standard rejection of homogeneity in demand analysis may be due to insufficient attention to the dynamic aspects of consumer behavior. Finally, in Section III, we offer a summary and conclusions. We believe that the results of this paper suggest that the AIDS is to be recommended as a vehicle for testing, extending, and improving conventional demand analysis. This does not imply that the system, particularly in its simple static form, is to be regarded as a fully satisfactory explanation of consumers' behavior. Indeed, by proposing a demand system which is superior to its predecessors, we hope to be able to reveal more clearly the problems and potential solutions associated with the usual approach.
Tourism Analysis, Oct 1, 2009
This study analyzes the economic determinants of domestic demand for tourism goods and services b... more This study analyzes the economic determinants of domestic demand for tourism goods and services by Australians in a preference-consistent utility maximization framework. A system of demand equations based on the almost ideal demand system, which incorporates seasonality, is estimated using tourist consumption data collected through quarterly national visitor surveys. The system consists of five commodity aggregates: accommodation, food, transportation, shopping, and entertainment. The estimated model obeys the basic postulates of consumer theory, homogeneity, and symmetry. The results indicate that demands are price inelastic while income elasticities varied significantly in magnitude across the commodity aggregates. It was also observed that the demands for the five commodity aggregates are complementary, implying that tourists' overall utility depends on the joint consumption of a bundle of goods and services. The observed price inelastic demand coupled with the apparent complementarity of demands across the consumption bundle may be reflective of the possibility that latent price sensitivity is associated with tourist demand.
Tourism Economics, Mar 1, 2009
This study examines the economic parameters underlying the ex post demand for Australian tourism ... more This study examines the economic parameters underlying the ex post demand for Australian tourism goods and services from ten source markets in Asia, Europe and North America. The results suggest that demand for the five broad commodity aggregates-accommodation, food, transport, shopping and entertainment-representing the key consumption by tourists, is price-inelastic, implying that all goods are necessities from the tourist's point of view. This result is consistent with the empirical reality that, once he or she has arrived in a destination, a tourist is bound to consume the available goods and services. A second important finding is the apparent complementarity of demands. This indicates that tourists tend to purchase a bundle of goods and services, all of which are necessary for the maximization of utility from visitation. The analysis also suggests that the underlying price elasticities exhibited through cross-price elasticity values have important implications for how price sensitivities can be better understood.
Australian Economic Papers, Dec 1, 1995
Tourism Management, Oct 1, 2010
This study analyses the consumption behaviour of international tourists from Australia's four maj... more This study analyses the consumption behaviour of international tourists from Australia's four major source markets: New Zealand, UK, USA and Japan. A preliminary analysis of their consumption expenditures reveals intriguing similarities as well as diversities in consumption patterns. These are sought to understand in terms of the utility-maximising framework in which observed differences in prices and incomes play a key role. Based on the neoclassical economic theory of consumer behaviour, models incorporating five major components of tourist consumption-Accommodation, Food, Transport, Shopping and Entertainment-are estimated. Overall, the level of tourist consumption is found to be highly sensitive to incomes but less sensitive to prices. The low price sensitivity suggests tourists perceive the commodities as necessities and may also reflect their captivity at the destination, masking the underlying true price sensitivities. An important dimension underlying these findings is the possible lack of information about the destination leading to sub-optimal consumption choices.
Annals of Tourism Research, 2003
A demand model for international tourism based on the consumer theory of choice is developed. The... more A demand model for international tourism based on the consumer theory of choice is developed. The model is applied to US, UK, Japan, and New Zealand demands for tourism in Australia and chosen alternative destinations. Estimated models are in conformity with the basic postulates of consumer theory, homogeneity, and symmetry. Derived elasticities reveal substantial cross-demand effects, reflecting the diversity of tourist preferences. The study has generated substantial new information on the effects and sensitivity of economic parameters on international tourism. The findings should assist in formulating broad national policy measures directed towards maintaining and enhancing relative competitiveness enjoyed by individual destinations and in developing strategic policy initiatives to maximize gains from tourism.
CAUTHE 2006: To the City and Beyond, 2006
A model of allocation of tourist expenditures was estimated to examine the economic parameters un... more A model of allocation of tourist expenditures was estimated to examine the economic parameters underlying the demand for Australian tourism goods and services by foreign tourists. The model was applied to major and minor sources of tourists to Australia. The elasticities derived from the two models show broad similarities, elasticities of demand for food are similar in magnitudes; expenditure elasticities are greater than unity and price elasticities are closer to unity. Similarly, the magnitudes of elasticities in relation to two other key components of tourists' consumption, accommodation and transportation, are also broadly similar. Elasticities of demand for the three major consumption items, food, accommodation, and transportation are price and expenditure inelastic implying that the three commodities are necessities from the tourists' point of view. The same consistency, however, is not evident in the elasticity parameters in relation to the commodity groups shopping and entertainment. These variations may reflect the differences in preferences of tourists from various sources.
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Papers by Sarath Divisekera