Price dynamics and market competition in resort industry: An agent-based modelling approach

Abstract

When resort quality is unclear before consumption, destinations use tools like customer profiles, numbers, and pricing strategies to attract tourists. To understand how these factors influence market dynamics, this study employs an Agent-Based Model (ABM) that simulates interactions between tourists and resorts, incorporating key elements such as pricing strategies, budget constraints, and crowding effects. By comparing competitive and heuristic pricing strategies, the findings reveal that heuristic approaches promote market stability, consumer diversity, and firm resilience, while competitive strategies often lead to market homogenization and reduced profitability. Access to market information is crucial for enhancing consumer utility and fostering healthy competition. These insights emphasize the need to balance short-term competitiveness with long-term sustainability, offering practical guidance for policymakers and destination managers. While based on stylized simulations, this research provides a foundation for further studies incorporating real-world data and addressing tourism market complexities.