Opaque Channel Research Articles

Pricing and Capacity Allocation in Opaque Selling

To solve the supply and demand mismatch problem, intermediaries have emerged as an opaque channel for service providers to dispose of leftover capacity. This paper focuses on pricing and capacity allocation in opaque selling. We develop a Stackelberg game model, where two capacity-constrained service providers first decide the capacity allocated to an intermediary who then determines the opaque price based on its capacity. We examine the conditions under which the service providers should cooperate with the intermediary, and find that the opaque price and capacity allocation decisions are affected by product type, service providers’ capacity, and commission rate. Moreover, we find that the service providers may fall into the prisoner's dilemma when distributing through the intermediary. It indicates that although opaque selling can bring service providers more profit, it may not help them achieve the optimal profit. In view of this, we propose an alliance policy to eliminate the prisoners’ dilemma and examine when the service providers should ally. Results show that this policy can improve the profits of the service providers and the whole supply chain if the commission rate is adequately low. Our findings suggest that opaque selling can be less beneficial than previously shown and demonstrate the importance of an alliance policy.

Quantification of Particle Filtration Using a Quartz Crystal Microbalance Embedded in a Microfluidic Channel.

To quantify colloidal filtration, a quartz crystal microbalance (QCM) with a silicon dioxide surface is embedded on the inner surface of a microfluidic channel to monitor the real-time particle deposition. Potassium chloride solution with micrometer-size polystyrene particles simulating bacterial strains flows down the channel. In the presence of intrinsic Derjaguin-Landau-Verwey-Overbeek (DLVO) intersurface forces, particles are trapped by the quartz surfaces, and the increased mass shifts the QCM resonance frequency. The method provides an alternative way to measure filtration efficiency in an optically opaque channel and its dependence on the ionic concentration.

The Dark Side of Recruitment in Crowdsourcing: Ethics and Transparency in Micro-Task Marketplaces

Micro-task crowdsourcing marketplaces like Figure Eight (F8) connect a large pool of workers to employers through a single online platform, by aggregating multiple crowdsourcing platforms (channels) under a unique system. This paper investigates the F8 channels’ demographic distribution and reward schemes by analysing more than 53k crowdsourcing tasks over four years, collecting survey data and scraping marketplace metadata. We reveal an heterogeneous per-channel demographic distribution, and an opaque channel commission scheme, that varies over time and is not communicated to the employer when launching a task: workers often will receive a smaller payment than expected by the employer. In addition, the impact of channel commission schemes on the relationship between requesters and crowdworkers is explored. These observations uncover important issues on ethics, reliability and transparency of crowdsourced experiment when using this kind of marketplaces, especially for academic research.

Visualization of Gas-Liquid Interfacial Behavior in a Narrow Channel Using High-Speed Neutron Imaging

Gas-liquid two-phase flow is a very complicated flow phenomenon that involves the interaction between gas and liquid phases. Recently, an accurate simulation technique of two-phase flow has been developed. However, the validation of the simulated results is insufficient due to less experimental data. It is especially difficult to measure interfacial behavior with significant spatio-temporal fluctuation. To understand such phenomena, measurement methods with high spatial and temporal resolutions are required. Neutron imaging is a powerful tool for two-phase flow visualization. It can be applied to flow measurement in an opaque channel and has applicability to the heated condition. In this study, two-phase flow in the narrow rectangular channel was visualized by high-speed neutron imaging. The dynamics of the interfacial structure of air-water flow were investigated from the neutron transmission images, and the liquid film behavior was observed qualitatively.

Demand and Revenue Impacts of an Opaque Channel: Evidence from the Airline Industry

Over time, opaque intermediaries, such as Hotwire and Priceline.com, have become an established distribution channel for the travel industry. We use a market response model and a dataset of economy class reservations from a major international airline to empirically examine the demand and cannibalization effects of the opaque channel. We find that: (1) the impact of the opaque channel on total demand is positive and significant in markets with high levels of competition; and (2) overall, the opaque channel cannibalizes the online transparent channel, but not the offline channel nor the full‐fare segment. However, we find that cannibalization of the offline channel moderately increases as markets become more concentrated. These results together suggest that airlines can benefit from opaque offerings mainly in markets with high levels of competition. Further, we develop a methodology to assess the revenue impacts of the opaque channel and show how it can be used by managers to develop and implement pricing tactics to increase demand and decrease cannibalization.

Use of opaque sales channels in addition to traditional channels by service providers

Motivated by the recent opaque selling trend promoted by Priceline and Hotwire, this study examines a game in which two collaborative service providers may use an opaque selling channel to satisfy demand from both leisure and business customers. Further, the service providers must make a strategic decision as to which opaque selling channel is more profitable: posted price (PP) or name your own price (NYOP). By comparing the profits from the three cases (traditional single channel, traditional and PP dual channel, and traditional and NYOP dual channel), we find some interesting results driven by the strategic interaction between two service providers and by the heterogeneity of customers. Firstly, a dual channel offers advantages over the single traditional channel, as opaque selling allows service providers to utilise customers’ heterogeneity, and thus facilitates price discrimination and customer segmentation. Secondly, choosing the traditional and NYOP mechanism enables service providers to optimise profits when the proportion and valuation of business customers, the opacity of the service, and the leisure customers’ degree of pessimism are all relatively high. Lastly, the traditional and NYOP combination outperforms the traditional and PP mechanism as a result of the relatively large pessimistic state of leisure customers.

Demand Growth in Services: A Discrete Choice Analysis of Customer Preferences and Online Selling

ABSTRACTThe selling of perishable services (e.g., hotel rooms, airline seats, and rental cars) online is increasingly popular with both retailers and consumers. Among the innovative approaches to online sales is opaque selling. First popularized by Priceline.com's name‐your‐own‐price model, opaque selling hides some attributes of the service (notably, brand and specific location) until after the purchase decision, in exchange for a discounted price. This means that a branded “product” is being sold as somewhat of a commodity, but the brand “name” is protected by the opaque model. The attraction of this model for retailers is that they are presumably able to increase their revenue stream, albeit at a lower rate, by selling rooms that otherwise would remain in inventory. In this article, we outline the development and analysis of an online choice survey to understand consumer preferences among three types of online distribution channels: regular full information sales channels, and opaque sales channels with or without consumer bidding. A Multinomial Logit model is employed to analyze the data and measure the consumer trade‐offs between price and other attributes of the product. We use the estimated model to calculate the incremental demand and revenue created by using an opaque channel simultaneously with regular full information channels. On balance, we find that correctly priced opaque channels can add to hotels revenue streams without undue cannibalization of regular room sales.

A newsvendor approach to inventory and pricing decisions in NYOP channels

In opaque selling certain characteristics of the product or service are hidden from the consumer until after purchase, transforming a differentiated good into somewhat of a commodity. Opaque selling has become popular in travel service pricing as it allows firms to sell their differentiated products at higher prices to regular brand loyal customers while simultaneously selling to non-loyal customers at discounted prices. At its simplest level, the process can be regarded as a Newsvendor problem where a supplier has to make both pricing and quantity allocation decisions for a perishable good or service. As the originator of opaque selling, Priceline.com provides unique data to sellers that allows them to better utilize their opaque selling mechanism. Recently Priceline has made some changes to their mechanism that have potential impacts on how firms set prices and control inventory within the channel. In this framework, the problem has the characteristics of Newsvendor problems with multiple price points. In this article, we develop optimal pricing and inventory policies for a seller releasing inventory to an opaque sales channel. Furthermore, we investigate the impacts of Priceline’s changes upon optimal prices and inventory allocation policies. The model is empirically illustrated using Priceline data for a 3.5 star hotel.

Determination of hot-wire position from a solid wall in an opaque channel

Hot-wire experiments sometimes require the position of the hot-wire probe with respect to a solid wall to be known, as is often the case with boundary layer flow measurements. However, optical access to determine the position of the wall visually may not always be available. The current paper describes a procedure to allow a hot wire to determine accurately the location of the solid wall with respect to any arbitrary reference position using the response of the hot wire when it approaches a solid wall under no flow conditions. An accurate probe-positioning system can then be used to position the probe with respect to this wall. The method is applied to both an aluminum wall and a Perspex wall, and both give consistent measurements with an accuracy of better than ±0.005 mm.

Strategic Vertical Market Structure and Opaque Products

This paper studies the strategic introduction of an opaque channel by incumbent rms. We endow a circular city model with an intermediary that sells lotteries (opaque products) over goods produced by upstream rms. Compared to the benchmark model (Salop, 1979), opaque intermediation creates value (welfare) by increasing the intensity of price competition and expanding industry sales, but the eect on the value captured by the rms is ambiguous. We show that rms can use the opaque intermediary as a