Examination of Restaurants Online Pricing Strategies: A Game Analytical Approach. Issue 6 (18th August 2017)

• Record Type: Journal Article
• Authors: Guo, Xiaolong; Zheng, Xiabing
• Is Part Of: Journal of hospitality marketing & management. Volume 26:Issue 6(2017)
• Page Start: 659
• Page End: 673
• Publication Date: 2017-08-18
• Subjects: E-commerce -- game theory -- online distribution -- pricing -- revenue management -- third-party website; Hospitality industry -- Marketing -- Periodicals; Leisure industry -- Marketing -- Periodicals; 338.47910688
• DOI: 10.1080/19368623.2017.1272085
• Languages: English
• ISSNs: 1936-8623

Abstract

ABSTRACT: This article studies the optimal pricing strategy employed by restaurants in cooperation with third-party websites. Using a mixed game model that consists of a Nash game among multiple restaurants and a Stackelberg game between these restaurants and a third-party website, this paper describes the cooperation and competition among the participants. Results suggest that the restaurants may not always provide price discounts for the third-party website because of the switching behaviors of their offline loyal customers. Moreover, the cooperation between a restaurant and a third-party website is encouraged only when the number of loyal customers is smaller than a threshold, which also depends on restaurant capacity.