Sustainable tourism modeling: Pricing decisions and evolutionarily stable strategies for competitive tour operators

Yong He, Peng He, Feifei Xu and Chunming (Victor) Shi
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Yong He: Southeast University, China
Peng He: Southeast University, China
Feifei Xu: Southeast University, China
Chunming (Victor) Shi: Wilfrid Laurier University, Canada

Tourism Economics, 2019, vol. 25, issue 5, 779-799

Abstract: In this article, we investigate two competitive tour operators (TOs) who choose between traditional tourism strategy (strategy T) and green tourism innovation strategy (strategy G). Our article attempts to address the following important issues using evolutionary game models: when would TOs facing environment-friendly tourists adopt the strategy G? How do TOs set product prices under different strategy combinations? How can the government effectively motivate TOs to pursue green tourism? Our research results show that a green tourism innovation pioneer could monopolize the market under certain conditions. Furthermore, when the environmental preference of tourists is sufficiently low, no TOs would adopt the strategy G; when it is moderate, only the TO with cost advantage (stronger TO) would adopt the strategy G; when it is sufficiently high, both TOs would select the strategy G. Our research also demonstrates that the stronger TO implements the strategy G mostly independent of the rival’s decisions, but the opposite is true for the TO with cost disadvantage (weaker TO). We further investigate potential government subsidies that can motivate TOs to carry out green tourism simultaneously. Our results suggest that to be more effective, the government first offer the green subsidy to highly competitive tourism locations and/or more innovative TOs.

Keywords: evolutionary game theory; government subsidy; green tourism innovation; Hotelling model; pricing (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:25:y:2019:i:5:p:779-799

DOI: 10.1177/1354816618806729

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