The case for price controls is adva

The case for price controls is advanced in terms of promoting the long-term growth of the tourist industry and preventing monopolistic exploitation of tourists through overcharging, a practice that can be damaging to the reputation of the destination. The argument for price regu lation is illustrated in Figure 18.3. Initially the destination is receiving V1 visitors, paying an average package price of P1 for their stay, with equilibrium being determined at the intersection of the demand schedule D1D1 and the short-run supply curve S1S1. Demand expands to D2D2, which gives the opportunity for suppliers to raise prices to P2, at the market equilibrium point B.