Competition and Cooperation of Scenic Areas in Oligopoly: A Perspective of Bertrand Equilibrium and Boxed Pigs Game
Received date: 2011-07-05
Request revised date: 2012-02-17
Online published: 2012-07-20
Copyright
Competition and cooperation of tourism destinations have been widely discussed for both academics and tourism practitioners. This article aims to examine the competition and cooperation relationship of oligopoly scenic areas from a game theory perspective. In particular, Bertrand model is firstly employed to analyze the competitive strategy of scenic areas under oligopoly environment, and the optimal ticket price under equilibrium is further identified. Secondly, boxed pigs game model is introduced to examine the cooperation of scenic areas for infrastructure investment under different scenarios. The results indicate that under the scenario that significant difference exists in the competitive power of scenic areas, the scenic areas with less competitive power are capable of increasing their tourist arrivals by free riding, whereas for other scenarios, all scenic areas involved either prefer to share the investment cost together or be not willing to invest at all. Finally, the theoretical conclusions are verified by the analysis on the two cases of Ngawa and the Southern Anhui in China. Here the Game theory is introduced to market behavior analysis of tourist attraction. Based on Bertrand equilibrium and boxed pigs game model, this artcile discusses the competition and cooperation of scenic areas under different scenarios. The results indicates that when the competitive powers among scenic areas are significantly different, then in the short term, the best competitive strategy for the scenic areas with less competitive power is to follow the prices established by the scenic areas with greater competitive powers. In the long term, tourist areas with less competitive power could improve themselves by promoting their brands, emphasizing the product difference, and being a free rider regarding with investing in infrastructure construction and promoting in potential tourist source markets. As for two scenic areas with similar competitive powers, they could enhance their competitive advantages by cooperation on branding and marketing the tourism destination as a whole, constructing internal transportation network together, and sharing human resources, information and other resources. This article analyzes the competition and cooperation under the assumption of complete market economy environment. Therefore, each scenic area is treated as an independent rational economic man and the impact of government is not considered. However in China, the governments play important roles in tourism market. For example, they are often the owners and managers of some scenic areas; they act as the supervisors and regulators of price competition in the tourism market; and they are largely involved in the cooperation amongst scenic areas, promotion of tourism destination and investment of tourism infrastructure. In the future, the impact of government on the cooperation and competition relationship between scenic areas could be further examined. Moreover, this study analyzes the competition and cooperation for the duopoly market structure. In the future other market structures should be also considered.
LUO Hao , CHEN Hao , CAO Jing . Competition and Cooperation of Scenic Areas in Oligopoly: A Perspective of Bertrand Equilibrium and Boxed Pigs Game[J]. SCIENTIA GEOGRAPHICA SINICA, 2012 , 32(7) : 784 -789 . DOI: 10.13249/j.cnki.sgs.2012.07.784
Table 1 Boxed pigs game model of infrastructure investment between scenic area表1 景区间基础设施投资的智猪博弈模型 |
景区1投资 | 景区1不投资 | |
---|---|---|
景区2投资 | A2-C,A1-C | A2-C,A1 |
景区2不投资 | A2,A1-C | 0,0 |
Table 2 Strategy combination of infrastructure investment cooperation between scenic area表2 景区间基础设施投资合作的策略组合 |
景区1投资 | 景区1不投资 | |
---|---|---|
景区2投资 | A2-(1-λ)C,A1-λC | A2-C,A1 |
景区2不投资 | A2,A1-C | 0,0 |
Fig.1 Spatial competition and cooperation pattern of scenic areas in Ngawa图1 阿坝地区的景区空间竞合格局 |
Fig.2 Spatial competition and cooperation pattern of scenic areas in the Southern Anhui图2 皖南地区的景区空间竞合格局 |
The authors have declared that no competing interests exist.
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