O2O Cooperation Model between OTA and TTA under Asymmetric Information

This paper proposes commission fee contraction from which OTA and TTA can co-exist by cooperation. Especially, imposition scheme of commission fee is also investigated under asymmetric information between OTA and TTA, and the comparison with symmetric information is made. Also, customer utility from using O2O product is derived and main factors influencing O2O demand. Main results are as follows. First, commission fee which OTA gives TTA under asymmetric information is lower than the fee that OTA gives high capacity TTA and higher than low capacity under symmetric information. Second, The O2O retail price under symmetric information is higher than asymmetric information. Third, for low capacity TTA, the commission fee and the effort of offline service provision under asymmetric information are higher than symmetric information. On the other hand, for high capacity TTA, they are lower than symmetric information. Fourth, the profits of high capacity TTA is lower and that of low capacity TTA is higher than symmetric information owing to commission fee. Fifth, the profit of OTA is lower under asymmetric because retail price is decreased. Finally, this paper presents the implications for tourism industry such as the necessity to gain information about offline service capacity of TTA. Especially, high capacity TTA needs to give information about its service capacity to OTA.