Scenario 17-1
Vacation Inns of America (VIA) has recently announced intentions of building a new hotel/resort complex in Myrtle Beach, South Carolina. Assume that the hotel/resort market in Myrtle Beach is characterized by monopolistic competition.
-Refer to Scenario 17-1.Existing hotels,motels,and lodging facilities in Myrtle Beach are likely to experience what kind of externality as a result of the new VIA hotel/resort?

Question

Quizplus · Accepted Answer

The existing hotels, motels, and lodging facilities in Myrtle Beach are likely to experience business-stealing externality as a result of the new VIA hotel/resort. This means that the new hotel will attract customers away from existing lodging facilities, leading to a decrease in their business and revenue.