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Game-Theoretic Study of the Dynamics of Tourism Supply Chains for Package Holidays under Quantity Competition

Author

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  • George Q. Huang

    (Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong, Hong Kong, PR China)

  • Wanli Chen

    (Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong and School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hong Kong, PR China)

  • Haiyan Song

    (School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, PR China)

  • Xinyan Zhang

    (School of Professional Education and Executive Development, The Hong Kong Polytechnic University, Hong Kong, PR China)

Abstract

This paper considers a tourism supply chain (TSC) for package holidays. Three sectors are included: a theme park, hotel and accommodation providers and tour operators. The different sectors are coordinated with each other, while enterprises within each compete in order to optimize their own objectives. This research studies the impacts of competitive and cooperative relationships between the enterprises on the dynamics of the TSC under quantity competition. Simultaneous non-cooperative games are used to model the competitive quantity decisions between enterprises in the same sector. A sequential game is established between the three sectors to coordinate tourist numbers. Sensitivity analyses are conducted to examine the dynamics of the supply chain in terms of several operating parameters, such as operating costs, sector size and product differentiation. Among the key findings are that member enterprises in one sector can benefit from intensified competition in a complementary sector in the same layer and that the upstream enterprises in the tourism supply chain prefer package holiday product differentiation strategies.

Suggested Citation

  • George Q. Huang & Wanli Chen & Haiyan Song & Xinyan Zhang, 2010. "Game-Theoretic Study of the Dynamics of Tourism Supply Chains for Package Holidays under Quantity Competition," Tourism Economics, , vol. 16(1), pages 197-216, March.
    • Handle: RePEc:sae:toueco:v:16:y:2010:i:1:p:197-216
    DOI: 10.5367/000000010790872150
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    References listed on IDEAS

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    1. Guido Candela & Roberto Cellini, 2006. "Investment in Tourism Market: A Dynamic Model of Differentiated Oligopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 35(1), pages 41-58, September.
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    4. Qinan Wang, 2002. "Determination of suppliers' optimal quantity discount schedules with heterogeneous buyers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(1), pages 46-59, February.
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