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Opaque distribution channels for service providers with asymmetric capacities: Posted-price mechanisms

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  • Mao, Zhaofang
  • Liu, Wei
  • Feng, Bo

Abstract

A new e-commerce model called online-to-offline (O2O) e-commerce has attracted significant managerial and academic attention. One of the most recent applications of the O2O model in the travel industry is opaque selling, which enables service providers to offer a new channel to potential customers. This study uses game models to analyze whether service providers with asymmetric capacities should contract with an intermediary to introduce an opaque distribution channel using a posted-price mechanism to sell opaque services. We construct models for both single-channel and dual-channel cases, and derive the optimal pricing strategies. A revenue sharing contract is established between service providers and an intermediary when the decision is made to use an opaque distribution channel. We then compare the profits obtained in the two cases and find some interesting results driven by asymmetric capacities and other related factors.

Suggested Citation

  • Mao, Zhaofang & Liu, Wei & Feng, Bo, 2019. "Opaque distribution channels for service providers with asymmetric capacities: Posted-price mechanisms," International Journal of Production Economics, Elsevier, vol. 215(C), pages 112-120.
    • Handle: RePEc:eee:proeco:v:215:y:2019:i:c:p:112-120
    DOI: 10.1016/j.ijpe.2018.01.022
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    5. Guo, Xiaolong & Bian, Junsong & Wu, Peiyan & Shi, Victor & Chen, Huangen, 2023. "Probabilistic product design with regret-anticipated consumers," International Journal of Production Economics, Elsevier, vol. 263(C).

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