Fixed, flexible, and dynamics pricing decisions of Airbnb mode with social learning

Yuting Chen, Rong Zhang and Bin Liu
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Yuting Chen: Shanghai Maritime University, China
Rong Zhang: Shanghai Maritime University, China
Bin Liu: Shanghai Maritime University, China

Tourism Economics, 2021, vol. 27, issue 5, 893-914

Abstract: The rise of the sharing economy has changed the traditional way of providing service to consumers. Airbnb is the most successful peer-to-peer model in the hospitality industry. This article investigates how to conduct strategic dynamic pricing in a competitive market by considering market conditions, quality, and risk sensitivity. Our research yields three main conclusions. First, we observe that the higher the risk level suppliers face, the more profit they will get; the lower the risk level consumers face, the more utilities they obtain. Second, we find that fixed pricing may be optimal or near-optimal for the platform when market size is small, the accommodation quality is better, and consumers’ reliability is low. Otherwise, a flexible pricing strategy is optimal. Finally, we extend the research into dynamic pricing decision in presence of Bayesian social learning and propose that the less-perfect accommodation requires social learning more urgently. In tourism peak period, social learning has less positive impact when the Airbnb accommodation is much perfect. These conclusions provide useful guidance on how the Airbnb and hotel can take advantage of the competitive market.

Keywords: Airbnb; Bayesian social learning; crowdsourcing-supply sharing platform; hotel; sharing economy; two-sided market (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:27:y:2021:i:5:p:893-914

DOI: 10.1177/1354816619896956

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