Applying bivariate normal distribution to construct demand model for travel product

Abstract

Ting et al., [Journal of Statistics & Management Systems, Vol. 13 (2010), No.3, pp. 479- 484] focused on the optimal pricing strategies for travel products under considering consumer’s willing to pay and affordability in order to maximize the firm’s profit. The main purpose of this study was to examine the impact of consumer’s willing to pay and transaction cost on the demand for travel products in order to establish better understanding of changes and trends in the demand of tourism. We investigated the percentage of transaction cost burdened by consumers and suppliers on the demand model for travel products under applying bivariate normal distribution. A demand model for travel product is constructed. In the condition of consumer willing to pay for travel product, as the supplier surplus is higher than two times of mean value of consumers transaction cost, the higher the percentage of transaction cost burdened by consumers, the more demand for travel products would be. When the supplier surplus is less than two times of mean value of consumers transaction cost, the higher the percentage of transaction cost burdened by consumers, the less demand for travel products would be.