Price and Service Competition in a Tourism Supply Chain

Sarat K. Jena () and Purushottam L. Meena ()
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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

Service Science, 2019, vol. 11, issue 4, 279-291

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.

Keywords: tourism supply chain; price competition; service competition; coordination (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:orserv:v:11:y:2019:i:4:p:279-291

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