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Price competition in a tourism supply chain

Author

Listed:
  • Sarat Kumar Jena

    (Goa Institute of Management, India)

  • Deepti Jog

    (Goa Institute of Management, India)

Abstract

In recent trend, advertising is seen to significantly impact channel members’ demand, pricing and profit in tourism supply chain (TSC). Most TSC studies, to date, assumed the market demand to be influenced only by tour price under price competitive environment, not considering the effect of advertising investment. In order to address this problem, two models are established considering decentralized channels: tour operator Stackelberg (TS) and local operator Stackelberg (LS). We analytically show TS model to provide better results than LS model and advertising to strongly influence the channel members’ pricing strategies and profit. Then we generalized the solution considering multiple operators under price competition. We studied two coordination mechanisms, cooperative advertising and two-part tariff, and found the two-part tariff provides better mechanism for improving the profit in LS model compared to cooperative advertisement.

Suggested Citation

  • Sarat Kumar Jena & Deepti Jog, 2017. "Price competition in a tourism supply chain," Tourism Economics, , vol. 23(6), pages 1235-1254, September.
    • Handle: RePEc:sae:toueco:v:23:y:2017:i:6:p:1235-1254
    DOI: 10.1177/1354816616674611
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    References listed on IDEAS

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    Cited by:

    1. Jena, Sarat Kumar & Meena, Purushottam, 2022. "Competitive sustainable processes and pricing decisions in omnichannel closed-up supply chains under different channel power structures," Journal of Retailing and Consumer Services, Elsevier, vol. 69(C).
    2. Manuel Rodríguez-Díaz & Rosa Rodríguez-Díaz & Ana Cristina Rodríguez-Voltes & Crina Isabel Rodríguez-Voltes, 2018. "Analysing the Relationship between Price and Online Reputation by Lodging Category," Sustainability, MDPI, vol. 10(12), pages 1-16, November.
    3. Kamal Sanguri & Atanu Bhuyan & Sabyasachi Patra, 2020. "A semantic similarity adjusted document co-citation analysis: a case of tourism supply chain," Scientometrics, Springer;Akadémiai Kiadó, vol. 125(1), pages 233-269, October.
    4. Xiangping Wang & Ivan Kai Wai Lai & Huajun Tang & Chuan Pang, 2022. "Coordination Analysis of Sustainable Dual-Channel Tourism Supply Chain with the Consideration of the Effect of Service Quality," Sustainability, MDPI, vol. 14(11), pages 1-24, May.
    5. 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.
    6. Manuel Rodríguez-Díaz & Crina Isabel Rodríguez-Voltes & Ana Cristina Rodríguez-Voltes, 2019. "Determining the Relationships between Price and Online Reputation in Lodgings," Administrative Sciences, MDPI, vol. 9(3), pages 1-27, July.

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