Market Segmentation: The Role of Opaque Travel Agencies

  title={Market Segmentation: The Role of Opaque Travel Agencies},
  author={Dmitry Shapiro and Xianwen Shi},
This paper investigates the role of discount travel agencies such as Priceline and Hotwire in the market segmentation of the hotel and airline industries. These agencies conceal important characteristics of the offered services, such as hotel locations or flight schedules. We explicitly model this opaque feature and show that it enables service providers to price discriminate between those customers who are sensitive to service characteristics and those who are not. Service providers can profit… CONTINUE READING

From This Paper

Figures, tables, and topics from this paper.


Publications referenced by this paper.

A Model of Add-on Pricing,

  • G. Ellison
  • Quarterly Journal of Economics,
  • 2005
Highly Influential
5 Excerpts

When Should a Service Provider Employ a ‘Name Your Own Price’ Channel?

  • T Wang, E. Gal-Or, R. Chatterjee
  • Working Paper,
  • 2006
Highly Influential
3 Excerpts

Recent Developments in the Economics of Price Discrimination,

  • M. Armstrong
  • Advances in Economics and Econometrics: Theory…
  • 2006
2 Excerpts

Similar Papers

Loading similar papers…