The Zero-Fee Tour: Price Competition and Network Downgrading in Chinese Tourism

Capturing the Gains Working Paper 28

22 Pages Posted: 11 Apr 2013

See all articles by Dev Nathan

Dev Nathan

Institute for Human Development

Yang Fuquan

Yunnan Academy of Social Sciences

Yu Yin

Independent Researcher

Date Written: April 9, 2013

Abstract

This paper deals with the impact of competition on the tourism network in China. It identifies the supply and demand conditions among service providers, tour operators and tourists that have led to the zero-fee tour and then deals with the impact of this intense price competition in terms of the reduction in product quality and degrading of the whole network. The paper also deals with various attempts by local governments and others to curb the zero-fee tour. It points out that price restrictions have worked in a destination that has established a brand value and, thus, has become a differentiated product. In concluding, the paper deals with the supply reductions that are needed to reduce price competition in various segments of the tourism network.

Keywords: China, tourism, price competition, product quality, network downgrading

Suggested Citation

Nathan, Dev and Fuquan, Yang and Yin, Yu, The Zero-Fee Tour: Price Competition and Network Downgrading in Chinese Tourism (April 9, 2013). Capturing the Gains Working Paper 28, Available at SSRN: https://ssrn.com/abstract=2247510 or http://dx.doi.org/10.2139/ssrn.2247510

Dev Nathan (Contact Author)

Institute for Human Development ( email )

NIDM Building, IIPA Campus
Indraprastha Estate
New Delhi, 110002
India

Yang Fuquan

Yunnan Academy of Social Sciences ( email )

577 Huan Cheng Xi Lu
Kunming, 650034
China

Yu Yin

Independent Researcher ( email )

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