Abstract
It is expected that the globalization process has progressively decreased the effect of geographical distance on worldwide trade flows. However, the gravity literature of international trade had traditionally failed to deliver consistent estimates for diminishing effects of distance and international borders on bilateral trade. This controversial issue has been labelled as the distance puzzle. Although this idea might also apply for tourism flows, it has not been explored yet. The present research aims to contribute to the existing literature by providing evidence of the existence of a distance puzzle for tourism demand. By estimating a structural gravity model for worldwide tourism flows, but considering substitutability between domestic and international tourism, results shows that accounting for the globalization process, by measuring international tourism costs relative to domestic ones, the distance puzzle disappears. However, results are sensitive to the proxy of domestic tourism used and the income level of the countries.
Organized by: Paolo Figini, University of Bologna | Department of Economics | Center for Advanced Studies in Tourism-CAST