Price-setting hotel competition with corporate social responsibility

Ferreira, Fernanda A.; Ferreira, Flávio; Gomes, Carlos Francisco Simões

http://hdl.handle.net/10400.22/20781

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Authors

Ferreira, Fernanda A.

Ferreira, Flávio

Gomes, Carlos Francisco Simões

Abstract(s)

Pricing plays an important role in any market competition, but particularly in those businesses that hold a seat in hyper competitive economic activities such as hotels. This paper analyses a market competition between one corporate social responsibility (CSR) hotel and one for profit (FP) hotel, in which both hotels set room prices. We study three different market behaviors: (i) both hotels take their decisions simultaneously; (ii) the CSR hotel takes the leader position; (iii) the FP hotel takes the leader position. For each situation, by using game theory techniques, we compute the different outcomes of the model at equilibrium. We also describe the effects of CSR on the outcomes.