From optimal to efficient tourism flows in cities: an urban economics perspective

Abstract Growing concerns over the downsides of an excessive number of tourist arrivals have led to increased focus on managing tourism flows and on the overtourism phenomenon. The aim of the paper is to interpret the concept of overtourism through the lens of urban economics. The paper extends an urban economic model to identify efficient intervals of urban touristic flows associated with situations in which average benefits exceed average costs for residents. Moreover, the analysis argues that cities can increase the number of tourists they can efficiently host or raise the threshold at which the city achieves overtourism by acting on their capacity to increase the quality of their tourist offer. The theoretical model is empirically confirmed through a municipal level cross sectional analysis on Italy, representing an interesting case due to large heterogeneity in terms of tourist flows and institutional proactivity toward tourism.