Economic effects of advertising expenditures - a Swedish destination study of international tourists

This study estimates the effects of advertising on international tourism demand for the leading Swedish mountain destination angstrom re. In contrast to previous studies, which primarily focus on tourism demand at a national or sectorial level, this research is conducted at the destination level. The study considers price levels at tourism destinations and tourists' income as determinants for tourism demand. However, following advertising theories and previous research, the dominance of the market power function (i.e. product differentiation) and the information function (i.e. market transparency) are identified as major co-determinants for international tourism demand. Demand elasticity coefficients are empirically estimated for the origin countries Norway, Finland, the Russian Federation, Denmark and the UK. Findings show that advertising is a significant driver of tourism demand from Norway, the UK and Russia. Interestingly, income and tourism price levels are less significant drivers of demand in all analysed origin markets.