Transport Provision to Tourists by a Cost Minimizing Firm : A Stochastic Characterization

We first delineate a general model that accounts for the common features of sightseeing trips to city attractions and to locations such as lakes and parks. Next, we use the theory of discrete-time Markov chains (DTMCs) to formalize this general model and then we compute the one-step transition probabilities of our Markov chain theoretic model. Finally, we show how our Markovian modeling approach can be used to derive the long run expected cost per day that a private firm, in the business of providing transport to tourists, might minimize