Price Competition in Tourism Supply Chain with Hotels and Travel Agency

Abstract

Tourism was considered a ``smokeless industry'', depending on using and developing the natural and cultural resources of a country to attract visitors. This paper studies the impact of different power structures on the room rates decisions in a tourism supply chain with two hotels, one luxury and the other economic, and one travel agency. Stackelberg game and Nash game models are formulated to analyze the pricing decisions in the power structures. We conduct comparative study between the three structures and explore the effects of different parameters on equilibrium prices, demands and profits.