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

Impact of Tourism Supply Chain Cost 
Generally speaking, increment of supply chain cost brings up the equilibrium price in terminal market, 
weakens the competitive capacity, and leads to poor performance, while performance of competitive TSC has been 
improved. There are four implications about Proposition 3. First, the best response for managers of TOs and HAs is 
lowing down their quantities decision when supply chain cost increases. For manager of TP, he’d better raise ticket 
price if his cost increase, or reduces price otherwise. Second, whichever cost increases, the equilibrium price of TO 
sector increases. This is because TO’s price consists of HA and TP’s prices, which are directly affected by their 
costs. Equilibrium price of HA change oppositely to price of TP when considering change of their cost. This 
behavior is to keep price of package holiday in appropriate level, just like both prices of HA and TP decrease when 
cost of TO increases. Third, it’s unprofitable for managers in TSC that no matter which sector’s operational cost 
increases, as their performances are linked to all the cost in supply chain. Market sharing, unit profit and profit 

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