IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v215y2019icp112-120.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527318300525
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2018.01.022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dmitry Shapiro & Xianwen Shi, 2008. "Market Segmentation: The Role of Opaque Travel Agencies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(4), pages 803-837, December.
    2. Anderson, Chris K. & Xie, Xiaoqing, 2014. "Pricing and market segmentation using opaque selling mechanisms," European Journal of Operational Research, Elsevier, vol. 233(1), pages 263-272.
    3. Jianbin Li & Qifei Wang & Hong Yan & Stuart X. Zhu, 2016. "Optimal Remanufacturing and Pricing Strategies Under Name-Your-Own-Price Auctions and Stochastic Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 33(01), pages 1-22, February.
    4. Gérard P. Cachon & A. Gürhan Kök, 2010. "Competing Manufacturers in a Retail Supply Chain: On Contractual Form and Coordination," Management Science, INFORMS, vol. 56(3), pages 571-589, March.
    5. Rachel R. Chen & Esther Gal-Or & Paolo Roma, 2014. "Opaque Distribution Channels for Competing Service Providers: Posted Price vs. Name-Your-Own-Price Mechanisms," Operations Research, INFORMS, vol. 62(4), pages 733-750, August.
    6. Scott Fay & Juliano Laran, 2009. "Implications of Expected Changes in the Seller's Price in Name-Your-Own-Price Auctions," Management Science, INFORMS, vol. 55(11), pages 1783-1796, November.
    7. Wang, Qifei & Li, Jianbin & Yan, Hong & Zhu, Stuart X., 2016. "Optimal remanufacturing strategies in name-your-own-price auctions with limited capacity," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 113-129.
    8. Fay, Scott & Xie, Jinhong & Feng, Cong, 2015. "The Effect of Probabilistic Selling on the Optimal Product Mix," Journal of Retailing, Elsevier, vol. 91(3), pages 451-467.
    9. Fay, Scott & Lee, Seung Hwan (Shawn), 2015. "The role of customer expectations in name-your-own-price markets," Journal of Business Research, Elsevier, vol. 68(3), pages 675-683.
    10. Barry C. Smith & Ross Darrow & John Elieson & Dirk Guenther & B. Venkateshwara Rao & Faker Zouaoui, 2007. "Travelocity Becomes a Travel Retailer," Interfaces, INFORMS, vol. 37(1), pages 68-81, February.
    11. Tuo Wang & Esther Gal-Or & Rabikar Chatterjee, 2009. "The Name-Your-Own-Price Channel in the Travel Industry: An Analytical Exploration," Management Science, INFORMS, vol. 55(6), pages 968-979, June.
    12. Zelin Zhang & Kissan Joseph & Ramanathan Subramaniam, 2015. "Probabilistic Selling in Quality-Differentiated Markets," Management Science, INFORMS, vol. 61(8), pages 1959-1977, August.
    13. Kinshuk Jerath & Serguei Netessine & Senthil K. Veeraraghavan, 2010. "Revenue Management with Strategic Customers: Last-Minute Selling and Opaque Selling," Management Science, INFORMS, vol. 56(3), pages 430-448, March.
    14. Qi Feng & Lauren Xiaoyuan Lu, 2012. "The Strategic Perils of Low Cost Outsourcing," Management Science, INFORMS, vol. 58(6), pages 1196-1210, June.
    15. Fay, Scott, 2008. "Selling an opaque product through an intermediary: The case of disguising one's product," Journal of Retailing, Elsevier, vol. 84(1), pages 59-75.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Feng, Bo & Mao, Zhaofang & Li, Hui, 2021. "Choices for competing service providers with heterogeneous customers: Traditional versus opaque sales modes," Omega, Elsevier, vol. 98(C).
    2. Oleg Badunenko & Daniel J. Henderson, 2024. "Production analysis with asymmetric noise," Journal of Productivity Analysis, Springer, vol. 61(1), pages 1-18, February.
    3. Zhang, Zhe & Song, Huaming & Shi, Victor & Yang, Shilei, 2021. "Quality differentiation in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 290(3), pages 1000-1013.
    4. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Feng, Bo & Mao, Zhaofang & Li, Hui, 2021. "Choices for competing service providers with heterogeneous customers: Traditional versus opaque sales modes," Omega, Elsevier, vol. 98(C).
    2. Guang Yang & Ying Wang & Mulin Liu, 2023. "Optimal Policy for Probabilistic Selling with Three-Way Revenue Sharing Contract under the Perspective of Sustainable Supply Chain," Sustainability, MDPI, vol. 15(4), pages 1-22, February.
    3. Yifan Wu & Shibo Jin, 2022. "Joint pricing and inventory decision under a probabilistic selling strategy," Operational Research, Springer, vol. 22(2), pages 1209-1233, April.
    4. Qing Li & Christopher S. Tang & He Xu, 2020. "Mitigating the Double‐Blind Effect in Opaque Selling: Inventory and Information," Production and Operations Management, Production and Operations Management Society, vol. 29(1), pages 35-54, January.
    5. Zhang, Yi & Hua, Guowei & Cheng, T.C.E. & Zhang, Juliang & Fernandez, Vicenc, 2020. "Risk pooling through physical probabilistic selling," International Journal of Production Economics, Elsevier, vol. 219(C), pages 295-311.
    6. Nosoohi, Iman, 2022. "Posted price and name-your-own-price in a product line design problem," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    7. Rachel R. Chen & Esther Gal-Or & Paolo Roma, 2014. "Opaque Distribution Channels for Competing Service Providers: Posted Price vs. Name-Your-Own-Price Mechanisms," Operations Research, INFORMS, vol. 62(4), pages 733-750, August.
    8. Yeu-Shiang Huang & Tzu-Yi Wu & Chih-Chiang Fang & Tzu-Liang (Bill) Tseng, 2021. "Decisions on Probabilistic Selling for Consumers with Different Risk Attitudes," Decision Analysis, INFORMS, vol. 18(2), pages 121-138, June.
    9. Aleksandra Kovacheva & Hristina Nikolova, 2024. "Uncertainty marketing tactics: An overview and a unifying framework," Journal of the Academy of Marketing Science, Springer, vol. 52(1), pages 1-22, January.
    10. 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).
    11. Fu, Qi & Wang, Qifei & Xu, Xiaoya & Lian, Zhaotong, 2017. "A two-product newsvendor system with a flexible product," International Journal of Production Economics, Elsevier, vol. 193(C), pages 590-601.
    12. Chen, Yahong & Li, Jinlin & Huang, He & Ran, Lun & Hu, Yusheng, 2017. "Encouraging information sharing to boost the name-your-own-price auction," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 479(C), pages 108-117.
    13. Ningyuan Chen & Adam N. Elmachtoub & Michael L. Hamilton & Xiao Lei, 2021. "Loot Box Pricing and Design," Management Science, INFORMS, vol. 67(8), pages 4809-4825, August.
    14. Krämer, Florentin & Schmidt, Klaus M. & Spann, Martin & Stich, Lucas, 2017. "Delegating pricing power to customers: Pay What You Want or Name Your Own Price?," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 125-140.
    15. Quan Zheng & Xiajun Amy Pan & Janice E. Carrillo, 2019. "Probabilistic Selling for Vertically Differentiated Products with Salient Thinkers," Marketing Science, INFORMS, vol. 38(3), pages 442-460, May.
    16. Rice, Dan Hamilton & Fay, Scott A. & Xie, Jinhong, 2014. "Probabilistic selling vs. markdown selling: Price discrimination and management of demand uncertainty in retailing," International Journal of Research in Marketing, Elsevier, vol. 31(2), pages 147-155.
    17. Zhang, Juliang & Deng, Lan & Liu, Huimin & Cheng, T.C.E., 2022. "Which strategy is better for managing multi-product demand uncertainty: Inventory substitution or probabilistic selling?," European Journal of Operational Research, Elsevier, vol. 302(1), pages 79-95.
    18. Adam N. Elmachtoub & Michael L. Hamilton, 2021. "The Power of Opaque Products in Pricing," Management Science, INFORMS, vol. 67(8), pages 4686-4702, August.
    19. Robert Zeithammer, 2015. "Optimal selling strategies when buyers name their own prices," Quantitative Marketing and Economics (QME), Springer, vol. 13(2), pages 135-171, June.
    20. Anderson, Chris K. & Xie, Xiaoqing, 2014. "Pricing and market segmentation using opaque selling mechanisms," European Journal of Operational Research, Elsevier, vol. 233(1), pages 263-272.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:215:y:2019:i:c:p:112-120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.