Modelling Intercontinental Tourism Consumption in S outh A frica: A Systems‐of‐Equations Approach

This paper investigates the pattern of inbound tourists' consumption in S outh A frica, examining four main intercontinental markets and five different tourism goods. The empirical investigation develops an almost ideal demand system ( AIDS ) model and it extends recent research by allowing tourists to base their spending decision on the real effective price differences between S outh A frica and their home country. The results show that tourist spending in S outh A frica is a luxury good, and tourists react normally to a change in the relative price of goods. The cross‐price elasticities suggest that the preferences of different markets influence their view of substitutability and complementary effects between various products in S outh A frica.