Game-Theoretic Study of the Dynamics of Tourism Supply Chains for Package Holidays under Quantity Competition

George Q. Huang, Wanli Chen, Haiyan Song and Xinyan Zhang
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George Q. Huang: Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong, Hong Kong, PR China
Wanli Chen: Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong and School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hong Kong, PR China
Haiyan Song: School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, PR China
Xinyan Zhang: School of Professional Education and Executive Development, The Hong Kong Polytechnic University, Hong Kong, PR China

Tourism Economics, 2010, vol. 16, issue 1, 197-216

Abstract: This paper considers a tourism supply chain (TSC) for package holidays. Three sectors are included: a theme park, hotel and accommodation providers and tour operators. The different sectors are coordinated with each other, while enterprises within each compete in order to optimize their own objectives. This research studies the impacts of competitive and cooperative relationships between the enterprises on the dynamics of the TSC under quantity competition. Simultaneous non-cooperative games are used to model the competitive quantity decisions between enterprises in the same sector. A sequential game is established between the three sectors to coordinate tourist numbers. Sensitivity analyses are conducted to examine the dynamics of the supply chain in terms of several operating parameters, such as operating costs, sector size and product differentiation. Among the key findings are that member enterprises in one sector can benefit from intensified competition in a complementary sector in the same layer and that the upstream enterprises in the tourism supply chain prefer package holiday product differentiation strategies.

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:16:y:2010:i:1:p:197-216

DOI: 10.5367/000000010790872150

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