The experts consider that the moratorium of tourist vacancies included in the Law of Urgent Measures for the Sustainability and Circularity of Tourism in the Balearic Islands, known as the Tourism Law, is “a barrier that closes the market” which “has repercussions such as a rise in prices”. This is one of the conclusions drawn yesterday during the first day of the VIII Congress of Ibiza Tourism Holiday Housing, held at the Cultural Center of Jesus.

As explained in the speech by Francisco Gonzรกlez, Professor of Commercial Law at the University of Valencia, this measure prevents the emergence of competitors, which leads to the protection of operators already established in the different markets to which it provides a monopoly. This situation increases market prices while, in his opinion, reducing consumer welfare in terms of variety and quality of supply. Gonzรกlez also highlighted the inflationary effect of the measure, as well as the reduction of diversity and stimuli it entails when it comes to improving the quality and competitiveness of the existing supply.

“The moratorium undermines the legitimate confidence offered to investors and discourages them from undertaking the necessary reforms to increase the quality of services. Hence, there is an increase in the underground economy because this type of measure increases strategic opportunity cost behaviors,” Gonzรกlez stressed. And he went further, as he assured that this measure is not justified in any of the 16 pages in which the reasons why it has been necessary to carry out a moratorium are set out.

“The Law says that it is the Administration that will determine the capacity of the tourist load, but this is neither necessary nor proportionate nor was it urgent. Reading the explanatory memorandum there is little justification for the general interest for which the rule is adopted. The protection of the environment is also mentioned, but there is no argument as to why a moratorium is necessary,” he said.

Four moratoriums in 25 years

Gonzรกlez also pointed out that the cost of restricting competition, in terms of loss of economic welfare, is not positive. “The public administrations fixing the amount and locations of economic activities is a useless effort that leads to melancholy,” he reiterated.

For this reason, the expert considered that, in order to adopt measures of this nature, it is essential to have regulatory impact reports. “It is necessary for the Balearic Govern to have a Competition Defense Authority. It is important for the Administration to take into account the repercussion of its regulations on the market”, he specified.

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