Travel agency referral and retailer competition

Kenichi Ohkita and Kazumitsu Minamikawa

World Review of Entrepreneurship, Management and Sustainable Development, 2016, vol. 12, issue 4, 457-466

Abstract: Tourists are one of the main market segments for service providers such as parks, museums, restaurants, and retailers. Travel agencies expose tourists in their package tours to service providers for a referral fee. This paper studies the competitive effects of travel agency referral in a setting where differentiated products are sold by two competing service providers. Using a simple spatial competition model, a non-cooperative game is analysed with informed tourists where duopolistic service providers compete on price, focusing on equilibrium prices and the profit of each service provider. This paper shows that referral is beneficial except where the cost of referral is too high. Service providers employ travel agency referral in order to mitigate the intensity of price competition by committing to higher prices.

Keywords: tourism; travel agency referrals; retailer referral strategies; retailer competition; consumer welfare; retail prices; pricing strategy; price competition; tour packages; non-cooperative games; travel agencies; retailing; package tours; equilibrium prices; profits; referral fees. (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=79317 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:wremsd:v:12:y:2016:i:4:p:457-466

Access Statistics for this article

More articles in World Review of Entrepreneurship, Management and Sustainable Development from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().