Unique optimal solutions under circumstances of non-cooperative decentralization: Four Stackelberg game models applied to hotel- online travel agency channels

Abstract

The paper develops four Stackelberg game models to explore the hotels-online travel agencies relationships to demonstrate unique optimal solutions under circumstances of non-cooperative decentralization. The specific Stackelberg game models are divided elementally into leaders and followers according to the roles played; and, they may be further sub-divided according to the types of decision variables involving commission rates and room rates. Results show that two of the four Stackelberg models used to determine the optimal commission rates and room rates exist. In the first model, the online travel agency, acting as the leader, determines the commission rate; and, the hotel, acting as the follower, determines the room rate. A unique optimal commission rate and room rate is therefore evident. In the second model, the hotel acting as the leader determines the commission rate and the online travel agency acting as the follower determines the room rate. Optimal commission rate and room rate exist as well. This business model has yet to be explored in future research.