Price Elasticity Of Demand: A Campground Example

Abstract

This study was undertaken to estimate price elasticity of demand for campgrounds within the Canadian Parks Service. However, as research proceeded, it became clearthata systematic factor was disrupting attempts to accurately estimate elasticity of demand. A critical step in the analysis was the identification of a feeder effect, which represents the interaction between a campground operating at full capacity and its associated camp grounds which are not operating at full capacity and which take the overflowfrom thefull campground. A key finding in the study was that feeder campgrounds can be drastically affected byfee increases. Aprice elasticity ofdemand model wasformulated to incorporate a measure for the feeder effect and the model was tested. Theresultsofthisstudypointtothe additional parameters and further research which would be required to provide valid models to estimate elasticity of demand.