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Pricing Competition and Channel Coordination in the Tourism Supply Chain with Optional Tours

Author

Listed:
  • Qiang Guo

    (Tourism College, Hainan University, Haikou, PR China)

  • Ye Shi

    (School of Management, University of Science and Technology of China, Hefei, PR China)

  • Junfeng Dong

    (School of Management, Hefei University of Technology, Hefei, PR China)

  • Xiaolong Guo

    (School of Management, University of Science and Technology of China, 96 Jinzhai Road, Hefei, Anhui Province 230026, PR China)

  • Chris K. Anderson

    (School of Hotel Administration, Cornell University, Ithaca, New York, USA)

Abstract

The authors consider a tourism supply chain that consists of a tour operator in the source market and a local operator at the destination. The tour product is composed of predesigned tours and optional tours. Consumers are sensitive to the price and the availability of optional tours, represented as the ratio of optional tours. The authors analyse how the ratio of optional tours to predesigned tours affects each player's equilibrium decisions given three different consumer attitudes towards optional tours. They find that when the channel is coordinated and the ratio of optional tours is sufficiently large, the local operator may reduce commissions. To curb the impacts of lowering commissions, the authors introduce a tax mechanism aimed at optional tours. Numeral examples are provided to illustrate the pricing impacts of optional tours.

Suggested Citation

  • Qiang Guo & Ye Shi & Junfeng Dong & Xiaolong Guo & Chris K. Anderson, 2014. "Pricing Competition and Channel Coordination in the Tourism Supply Chain with Optional Tours," Tourism Economics, , vol. 20(5), pages 939-960, October.
    • Handle: RePEc:sae:toueco:v:20:y:2014:i:5:p:939-960
    DOI: 10.5367/te.2013.0316
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    References listed on IDEAS

    as
    1. Haiyan Song & Shu Yang & George Q. Huang, 2009. "Price Interactions between Theme Park and Tour Operator," Tourism Economics, , vol. 15(4), pages 813-824, December.
    2. Junfeng Dong & Ye Shi & Liang Liang & Huaqing Wu, 2012. "Comparative Analysis of Underdeveloped Tourism Destinations' Choice of Cooperation Modes: A Tourism Supply-Chain Model," Tourism Economics, , vol. 18(6), pages 1377-1399, December.
    3. Schiff, Aaron & Becken, Susanne, 2011. "Demand elasticity estimates for New Zealand tourism," Tourism Management, Elsevier, vol. 32(3), pages 564-575.
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    Cited by:

    1. Tsaur, Ruey-Chyn & Chen, Chyoug-Hwa, 2018. "Strategies for cross-border travel supply chains: Gaming chinese group tours to Taiwan," Tourism Management, Elsevier, vol. 64(C), pages 154-169.
    2. Xijia Huang & Shuai Zhu & Jia Wang, 2021. "Optimal Emission Reduction and Pricing in the Tourism Supply Chain Considering Different Market Structures and Word-of-Mouth Effect," Sustainability, MDPI, vol. 13(7), pages 1-13, April.
    3. Carmen D à lvarez-Albelo & José A Martínez-González, 2024. "Should antitrust regulators be wary of inter-firm coordination agreements through a tourism destination card?," Tourism Economics, , vol. 30(2), pages 324-344, March.
    4. Jingmei Xu & Li Hu & Xiaolong Guo & Xia Yan, 2020. "Online cooperation mechanism: game analysis between a restaurant and a third-party website," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(1), pages 61-73, February.

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