Cooperation contract in tourism supply chains

What is it about?

► Analyzed the cooperation between hotels and third party websites about the online distribution issue. ► First best solution as an integrated supply chain and second best one in the decentralized scenario are analyzed. ► The effort investment is determined by the commission fees and available capacities of the hotels. ► The findings help hotels and websites to choose partners and improve cooperative relationship.

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Why is it important?

This paper aims to find the optimal pricing strategy for tourism hotels when they operate their online distribution channel by cooperating with a third party website. The paper first gives the first-best solution when all the participants are integrated as a single system, and then leads to the second-best one under the decentralized scenario through a non-cooperative game model composed by a Stackelberg game between the hotels and the website and a Nash game among the hotels. Through a numerical example, we analyze the decision making process of the players; and give the service providers some useful suggestions for operating their cooperative relationship successfully.