An advanced microeconomic framework of information asymmetries and other challenges foreign tourists face in India
Tourism in India generates over US$240 billion annually. With historic sights and exquisite cuisine, India has unmatched tourism potential. Yet, a substantial part of it remains untapped due to challenges such as female harassment, exploitation, price gouging and pollution. This paper analyzes the microeconomic forces of market failure, information economics and price discrimination behind these challenges. By unlocking the microeconomic foundation of these issues and leveraging contract theory, I design two tour guide contract prototypes. The first design is a system where training acts as a signal and credibly segregates tour guides based on quality. The second design is a system that aligns tour guide incentives with the tour company and induces guides to exert higher effort during tours. Together, these tackle strong information asymmetries that currently exist in Indian tourism. Finally, through the rational consumer choice model, I analyze the specific impact of mitigating these challenges on the individual decision-making framework of tourists.
Resha Chandak. An advanced microeconomic framework of information asymmetries and other challenges foreign tourists face in India. International Journal of Social Research and Development, Volume 3, Issue 2, 2021, Pages 14-20