Anti-Competitive Practices In The Tourism Industry: The Case Of Small Economies

Abstract

Who benefits from the proliferation of ecolodges, beachfront resorts, safari parks, river cruises, forest forays and other similar and increasingly popular ventures popping up in developing economies across the world? Critics hold that multinational hotel chains, influential tour operators and foreign interests sometimes in association with powerful domestic groups often engage in anticompetitive practices at the expense of local communities, domestic workers and other stakeholders where the tourism activities take place. In this paper, we examine the possibility of market power abuses in the tourism industry in small economies or small national economies. Many of these small economies have recently inaugurated antitrust enforcement agencies charged with curtailing market power abuses and other anticompetitive practices. We also examine how effective these agencies are likely to be in challenging the powerful tourism industry. Succinctly, we conclude that monopsonistic practices may arise in the tourism sector of small economies. But we argue that domestic competition agencies are not suited to challenge monopsony for various reasons including a lack of political will. We also analyze the plausible cartelization role of regional marketing boards. Regional marketing boards are collaborative efforts by groups of countries. Because it is entrusted with cross jurisdictional enforcement of competition laws, a “regional” agency with jurisdiction in several countries across a region may be more likely to successfully confront monopsony problems. However, we conclude that a regional enforcement agency is equally unlikely to successfully challenged cross-border anticompetitive practices because it is not likely to challenge the impairment of consumer welfare of foreign nationals.