Abstract
A component of efficient market prices is symmetry of information between market participants. More specifically, information asymmetry has the potential to bestow market power on the holder of superior information and permit the charging of monopoly prices. This paper develops a method for assessing the impact of information asymmetry on pricing behaviour in markets in which there is a seasonal influx of tourists. It also presents the results of a study which applies the method in an Australian tourism destination and tests the extent to which the proportion of uninformed tourists can create price dispersions in this location. In addition to testing the hypothesis of two equilibrium prices, the data were also used to investigate collusive pricing behaviour. Limitations of the method are identified to inform future studies in other locations.
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