Designing online selling mechanisms: Transparency levels and prices

Authors:
Nelson Granados;Alok Gupta;Robert J. Kauffman
Affiliations:
Graziadio School of Business and Management, Pepperdine University, United States;Carlson School of Management, University of Minnesota, United States;W.P. Carey School of Business, Arizona State University, United States
Venue:
Decision Support Systems
Year:
2008

Citing 8
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Abstract

Sellers increasingly compete with innovative Internet-based selling mechanisms, revealing or concealing market information. Transparency strategy involves design choices by firms that influence the availability and accessibility of information about products and prices. We develop decision support models for suppliers to set prices for online mechanisms with different transparency levels. We then empirically analyze the price levels set by airlines across transparent and opaque online travel agencies. Our results suggest that airlines can increase profit by increasing price differentials or influencing OTA transparency differences. We also discuss application generality and limitations of our results.