Analysis of Pricing Equilibrium of Tourism Supply Chain Based on Network Externality

Abstract

Considering the network externality of OTA platform, OTA’s sales effort and room ratail price, the market demand function is established based on consumer utility theory. The pricing decision models of tourism supply chain consisting of a hotel and an OTA platform under different game structures are constructed to analyze the influence of the network externality. The centralized decision making process is used as a reference. The study found that the network externality creates value for supply chain. The network externality of the platform will not affect the hotel’s wholesale price decision under the wholesale price model. However, under the wholesale price model and the commission model, the hotel room retail price will both increase with the increase of network externality intensity coefficient, which leads to the increase in the profit of the OTA platform and the entire supply chain. When the network externality is within a certain range, the higher room retail price can be obtained under the commission model. In addition, the network externality also increases the value of sales efforts. The overall profit difference between the wholesale price model and the commission model will decrease first and then increase as the network externality intensity coefficient increases.