Some Issues in Granting Park Concessions in Smaller Countries

Abstract

If parks have particular characteristics, park managers should grant firms exclusive right to provide products or services within the park. Thus, contrary to the usual case, the manager is wise to allow monopoly provision of park development. The particular characteristics include that park development is only attractive to foreign visitors, that foreign visitors are only valuable for the currency they spend, and that development and congestion reduce the park's value to domestic visitors. A park manager seeks to maximize the sum of foreign currency earnings less production cost of development and consumer surplus of domestic visitors less travel cost. Permitting monopoly to provide development means maximizing net revenue from sale of services to foreigners. Monopoly concessions also mean less development is produced than under competing concessions. Less development and fewer foreign visitors mean increased value to domestic visitors.