Dual Channel Oligopoly Competition Strategy of Opaque Sale Based on the Hotelling Model

Yu Tu1, Hao Li1,2*

1School of Economics and Management, Chongqing Jiaotong University, Chongqing, 400074, China

2Western China Transportation Economy-Society Development Study Center, Chongqing, 400074, China

Abstract: Opaque sale is a popular selling strategies for selling leftover capacity in airline ticket sales and is rapid development in recent years. This paper builds two oligopoly competition models, one is about single opaque sales channel, the other is dual channel (direct channel and opaque sales channel). Designed to find out which sales channel is more conducive to improving the revenue of the two airlines. We find that two sales channels exist when the passenger are less willing to buy. And In the case of opaque sales, sell from dual channel can effectively increase airlines’ equilibrium profit. At the same time, the intermediary is motivated to implement this strategy. The increase in revenue of airlines and intermediaries illustrates the driving role of dual channel joint sales in driving market demand. Theoretical references can be provided for the pricing in competitive and channel selection of airlines.

Keywords: Opaque sale; Passenger strategic behavior; Revenue management