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Abstract(s)
This research applies game theory to analyse price-set competition between a nonprofit hotel and a for-profit (private) hotel, in a differentiated service market, with uncertain demand. The nonprofit hotel aims to maximize social welfare. We compute the Bayesian-Nash equilibrium, and we analyse the effects of the degree of the weight assigned to consumer surplus on market equilibrium outcomes. As a result, we get that as the nonprofit hotel values more the consumer surplus, both hotels set lower prices. Furthermore, the expected profit of the for-profit hotel decreases with the degree of the weight assigned to consumer surplus; and the expected profit of the nonprofit hotel decreases (resp., increases) with the degree of altruistic preference, for either low (resp., high) values of this degree. We also compare the results obtained with the ones when the nonprofit hotel aims to maximize the sum of its own profit with the consumer surplus (with some weight assigned to it).
Description
Keywords
Game theory Bertrand model Hotel pricing strategies Demand uncertainty
Citation
Publisher
Academic Conferences and Publishing International