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Price and Service Competition in a Tourism Supply Chain

Author

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  • Sarat K. Jena

    (Goa Institute of Management, Poriem, Sanquelim 403505, India;)

  • Purushottam L. Meena

    (School of Management, New York Institute of Technology, Old Westbury, New York 11568)

Abstract

The tourism supply chain literature has predominantly focused on price-sensitive demand and ignored the service-sensitive demand issue. In competitive practice, price- and service-sensitive demand plays a significant role for the tourists in selecting a tour package. This paper discusses a case where two tour operators compete on price and service to offer tour packages and serve the customers through a common local operator. We develop a mathematical model for a tourism supply chain under three scenarios: (i) a decentralized scenario, (ii) an integrated channel scenario, and (iii) a global scenario. The results show that the tourism supply chain generates more profit in competition than it does without competition. Furthermore, we found that coordination among supply chain members with a surplus sharing contract improves the overall tourism supply chain profit compared with the decentralized scenario.

Suggested Citation

  • Sarat K. Jena & Purushottam L. Meena, 2019. "Price and Service Competition in a Tourism Supply Chain," Service Science, INFORMS, vol. 11(4), pages 279-291, December.
    • Handle: RePEc:inm:orserv:v:11:y:2019:i:4:p:279-291
    DOI: 10.1287/serv.2019.0240
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    References listed on IDEAS

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    Cited by:

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    3. Ma, Shigui & He, Yong & Gu, Ran, 2021. "Joint service, pricing and advertising strategies with tourists’ green tourism experience in a tourism supply chain," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).

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