Public goods in tourism municipalities: formal analysis, empirical evidence and implications for sustainable development

Abstract

This paper formally analyses the effects that public goods (in a broad sense) have on tourists and private tourism firms. By approaching the tourism product as a bundle of characteristics, the paper shows how the supply of public goods in tourism municipalities positively affects both the tourists' utility functions and the private firms' production functions. Some implications of this fact regarding the sustainability of tourism are discussed. By means of hedonic methods, empirical evidence of location on prices for hotels on Catalonia's coast (Spain) is provided