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Joint Opaque booking systems for online travel agencies

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Author Info

  • Malgorzata Ogonowska

    ()
    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis)

  • Dominique Torre

    ()
    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis)

Abstract

This paper analyzes the properties of the advanced Opaque booking systems used by the online travel agencies in conjunction with their traditional transparent booking system. In section 2 we present an updated literature review. This review underlines the interest and the specicities of Opaque goods in the Tourism Industry. It also characterizes properties of the Name-Your-Own-Price (NYOP) channel introduced by Priceline and oering probabilistic goods to potential travelers. In the section 3 of the paper we present a theoretical model, in which we wonder what kind of Opaque system can be implemented by a given online monopoly. We compare the "Opaque \Hotwire system", a NYOP system without any possibility of rebidding and the joint implementation of these two systems. We nd that the NYOP system and the joint implementation can have challenging properties if consumer's information is complete. Then, in section 4, we analyze the case of incomplete information. We develop an appropriate setting to integrate the lack of complete information of potential passengers on their relative propensity to pay. We analyze three cases corresponding to dierent levels of uncertainty and number of tickets available. We nd that in some relevant cases (average number of tickets, moderate uncertainty), the joint implementation of 2 dierent Opaque booking systems is advantageous for the Online travel Agencies (OTAs) and airlines. This result casts doubt on the current OTAs' strategies.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number hal-00476150.

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Date of creation: 15 Mar 2010
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Handle: RePEc:hal:wpaper:hal-00476150

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00476150/en/
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Related research

Keywords: Opaque Selling; Name-Your-Own-Price; Economics of Tourism; Online Travel Agencies; Probabilistic Goods.;

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  1. Shapiro, Dmitry & Zillante, Arthur, 2009. "Naming your own price mechanisms: Revenue gain or drain?," Journal of Economic Behavior & Organization, Elsevier, vol. 72(2), pages 725-737, November.
  2. Dmitry Shapiro & Xianwen Shi, 2008. "Market Segmentation: The Role of Opaque Travel Agencies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(4), pages 803-837, December.
  3. Bottazzi, L. & Da Rin, M. & Hellmann, T., 2004. "The changing face of the European venture capital industry: Facts and analysis," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3106559, Tilburg University.
  4. Christian Terwiesch & Sergei Savin & Il-Horn Hann, 2005. "Online Haggling at a Name-Your-Own-Price Retailer: Theory and Application," Management Science, INFORMS, vol. 51(3), pages 339-351, March.
  5. Chowdhry, Bhagwan & Nanda, Vikram, 1996. "Stabilization, Syndication, and Pricing of IPOs," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 31(01), pages 25-42, March.
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