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Opaque Selling: Static or Inter-Temporal Price Discrimination?

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  • Courty, Pascal
  • Liu, Wenyu

Abstract

We study opaque selling in the hotel industry using data from Hotwire.com. An opaque room discloses only the star level and general location of the hotel at the time of booking. The exact identity of the hotel is disclosed after the booking is completed. Opaque rooms sell at a discount of 40 percent relative to regular rooms. The discount increases when hotels are more differentiated. This finding is consistent with static models of price discrimination. No support was found for predictions specific to inter-temporal models of opaque selling.

Suggested Citation

  • Courty, Pascal & Liu, Wenyu, 2013. "Opaque Selling: Static or Inter-Temporal Price Discrimination?," CEPR Discussion Papers 9463, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9463
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    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.
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    5. 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.
    6. Arturs Kalnins, 2006. "Markets: The U.S. Lodging Industry," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 203-218, Fall.
    7. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
    Full references (including those not matched with items on IDEAS)

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    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).

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    More about this item

    Keywords

    Inter-temporal price discrimination; Opacity; Opaque selling; Product differentiation;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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