Institutional Factors Influencing the Size and Structure of Tourism: Comparing Dalarna (Sweden) and Maine (USA)

This paper explains why neither Maine, USA's comparatively laissez faire economic and land use institutions, nor Dalarna, Sweden's more heavily regulated economy, seems well designed to make tourism a powerful economic development engine. The paper focuses on three clusters of institutions that have a major influence on tourism's scale, economic structure, and long-term sustainability. Labour laws and labour market institutions are important determinants of tourism employment, job quality, product mix, production methods, and regional competitiveness. Land ownership and property rights influence both the incentives facing landowners, tourists, and tourism businesses and stresses on ecosystem carrying capacity. Commodity taxes affect the absolute and relative prices of various tourist services and, via feedback effects on demand, influence tourism's aggregate scale, activity mix and transportation/location patterns. The paper employs institutional contrasts between Dalarna and Maine to frame hypotheses that will guide a larger comparative study of sustainable tourism in forest regions. Perhaps most controversially, we hypothesise that Sweden's venerable right of common access (allemansrätten), as currently implemented, impedes sustainable tourism development. An appendix sketches the current state of tourism in the two regions.