Cooperation strategy for an online travel platform with value‐added service provision under demand uncertainty

Abstract

AbstractThis paper considers a tourism supply chain (TSC) composed of an online travel platform (OTP) that possesses private information about uncertain demand and a tourism service provider (TSP) that invests in value‐added service. We investigate the OTP's cooperation strategy, which consists of the cooperation model choice between the agency and the wholesale models and the demand information sharing decision. The results show that when both the commission rate and the value‐added service efficiency are relatively low or high, the OTP chooses the wholesale model and shares information only if the service efficiency is relatively high. When the service efficiency is medium, the OTP prefers the agency model and information sharing. However, when the commission rate is relatively high and the service efficiency is relatively low, as the demand signal accuracy increases, the OTP's preferred cooperation strategy switches from the agency model and information sharing to the wholesale model and no information sharing. In particular, compared with the wholesale model, the agency model may benefit the OTP less (more) even if the commission rate charged by the OTP is high (low). We also find that the OTP's optimal cooperation strategy may be inconsistent with that of the TSP and the TSC, and there exist the Pareto improvement regions of the cooperation model and information sharing strategies.