Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

Key Words:
Tourism supply chain, Package holiday, Game theory, Competition. 
INTRODUCTION 
Package holiday or all-inclusive travel has been popular and is likely to retain its popularity in many 
countries such as Japan, Ireland, UK and China (Nozawa 1992; Corcoran, Gillmor and Killen 1996; Taylor 1998; 
Wang, Hsieh and Huan 2000). According to the European Union's Package Travel Regulations (1992), ‘package’ 
means the pre-arranged combination of at least two of the components (transport, accommodation, and other tourist 
services) when sold or offered for sale at an inclusive price and when the service covers a period of more than 24 
hours or includes overnight accommodation. For example, a package holiday to Hong Kong sold by tour operators 
usually consists of a one-night accommodation in Hong Kong, a core attractive component in a theme park such as 
DisneylandHK or OceanPark, and shopping experiences in Time Square and Pacific Places. 
Different types of tourist components (activities) in package holidays are provided by specialist agents and 
enterprises that form tourism supply chains. The tourism supply chain (TSC) comprises the suppliers of all the 
goods and services that go into the delivery of tourism products to consumers (Richard and Xavier). Among these 
suppliers, tour operators play principal roles as the intermediaries bringing buyers and sellers together, packaging 
relative tourism productions into a single product, then marketing it in objective segment (Tepelus 2004). 
Enterprises in a TSC, on one hand, benefit from providing package tours, as this is more attractive and 
economic than separating tourist products for individual tourists (Aguiló, Alegre and Sard 2003). On the other hand, 

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