Do the Olympics Make good Neighbours?

Olympics are art of a group referred to as mega events

o Mega events have relatively small impact on the host city the
reason is because the event displaces the locals and it also displaces
tourists who would otherwise come
o This paper looks at the effect on Colorado ski resorts of the 2002
winter Olympics held in Salt Lake City
o Thesis: Olympics have significant spillover effects on surrounding
communities if these communities provide services that are close
substitutes for those in the host city
o Tourists look for reasonable alternatives
o Nearby cities can free ride on the event by serving as outlets for
frustrated tourists
o Of 16 Colorado countries with ski resorts in 2002 had 10 had an
increase in economics activity during the Olympic year
o During Q1 2002, gross taxable sales data for 6 Utah counties with ski
resorts increased 0.01% while GDP growth was 3.1%
o Utility benefit or satisfaction a consumer receives from the
consumption of a good or service
o Consider 3 goods

If Z is Colorado ski vacations than

Z > Z*
Yit = XitB + Dis
Yit is a measure of economic activity in an area (i) at time t
Xit is all variables that differ across countries or across time
o They capture the fact that economic activity may grow over time,
vary by season or differ because of population, location, ETC
Dis is a series of variables denoting the period in which the spillover might
have occurred
 If the effect has a spillover on community (i) than gama(is) is positive and
statistically significant

Holding Sales (DEC)

QTR (variable that compensates the fact that many businesses report
quarterly)
UEt Emplyment rate
RESi (# of resorts)
POPit (population)
LIFTi (# of lifts)
Dis
O YRt (year in which Olympics occur)
OSEAt (ski season surrounding the Olympics)

RNTRSit = B0 + B1TR + B2DECt + B3QRTt + B4UEt + B5 RESt + B6LIFTi + B7POPit +

Gamma1OYRt + Gamma2OSEAt + gamma3OMOt + Sumof gammajINTERj
What should we expect?
B1 +ve - Reflecting overall strenth
B2 +ve reguljar spike in holiday shopping
B3 +ve regular spike in quarterly sales
B4 ve (unemplyemnt rate rose between 2000-03)
B5 B6 B7 all +ve
If 2002 olympics have spillover effect on Colorado than gamma 1-3 and Sj are +ve