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

Impact of Tourism Supply Chain Membership 
Increased competition is reflected in an increased number of tourism enterprises (Banker, Khosla, and 
Sinha 1998). Proposition 4 shows many implications. First, the larger number of TOs and HAs in the TSC lead to a 
larger marketing sharing and a higher unit and total profit of TP. In the stand of TP, attracting more TOs and HAs 
joining TSC could strengthen his market power. On the other hand, increment of competitors reduces unit profit and 
total profit of enterprises in the same sector, while enterprises from other sectors in the same TSC get benefit. 
Second, impact on TP and HA’s prices is intuitional, while TO’s price decreases no matter what the number of TO 
increases or the number of HA increases. The reason is because price of HA is a part of TO’s cost which is reduced 
by the price cutting down by HAs. Third, the impact on competitive TSC is obviously negative as all the members’ 
prices, unit profits and total profits drop down. 
Proposition 5 is in the viewpoint of the whole sector or TSC. It tells that sector has maximal profit when it 
is dominated by a monopoly. Impact of new entry is significant, so that it decreases not only profit of reigning 
enterprises, but also profit of the sector. This could be explained as effect of vertical competition. More competitors 
in one sector lead to lower market price, while other sectors enjoy this price-cutting. We notice that more supply 
chain member brings competition advantage as total surplus rises and enterprises in competitive TSC have decreased 
profit. However, the increased profit is streamed to complementary sector. 
Competitors can be divided into two different types in our model: direct ones and indirect ones. Direct 
competitors present the members in the same sector in the same TSC, while indirect competitors present the 
members in the same sector in the different TSC. According to Proposition 4, the join of new competitors in a 
specific TSC decreases the profit of enterprises in corresponding sector, while the join of new competitor in the 
opponent TSC also result in profit decrement. What’s the difference between these two influences? To answer this 
question, numerical computations have been performed as below. Results shown in the table are percentage-wise 
changes compared with benchmark.