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Hotel rankings of online travel agents, channel pricing, and consumer protection

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Listed:
  • Hunold, Matthias
  • Kesler, Reinhold
  • Laitenberger, Ulrich

Abstract

We investigate whether online travel agents (OTAs) assign hotels worse positions in their search results if these set lower hotel prices at other OTAs or on their own websites. We formally characterize how an OTA can use such a strategy to reduce price differentiation across distribution channels. Our empirical analysis shows that the position of a hotel in the search results of OTAs is better when the prices charged by the hotel on other channels are higher. This is consistent with the hypothesis that OTAs alter their search results to discipline hotels for aggressive prices on competing channels, thereby reducing the search quality for consumers.

Suggested Citation

  • Hunold, Matthias & Kesler, Reinhold & Laitenberger, Ulrich, 2018. "Hotel rankings of online travel agents, channel pricing, and consumer protection," ZEW Discussion Papers 18-059, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:18059
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    References listed on IDEAS

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    Cited by:

    1. Maximilian Schäfer & Kevin Ducbao Tran, 2020. "Airbnb, Hotels, and Localized Competition," Discussion Papers of DIW Berlin 1889, DIW Berlin, German Institute for Economic Research.
    2. M. Narciso, 2022. "The Unreliability of Online Review Mechanisms," Journal of Consumer Policy, Springer, vol. 45(3), pages 349-368, September.
    3. Gomes, Renato & Mantovani, Andrea, 2020. "Regulating Platform Fees under Price Parity," CEPR Discussion Papers 15048, C.E.P.R. Discussion Papers.
    4. Peitz, Martin, 2020. "Economic policy for digital attention intermediaries," ZEW Discussion Papers 20-035, ZEW - Leibniz Centre for European Economic Research.
    5. Joan Calzada & Nestor Duch-Brown & Ricard Gil, 2021. "Do search engines increase concentration in media markets?," UB School of Economics Working Papers 2021/415, University of Barcelona School of Economics.
    6. Paul Belleflamme & Martin Peitz, 2018. "Inside the Engine Room of Digital Platforms: Reviews, Ratings, and Recommendations," Working Papers halshs-01714549, HAL.

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    More about this item

    Keywords

    consumer protection; free-riding; hotel booking; online travel agents; ranking; search bias;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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