Opaque Distribution Channel for Service Providers with Asymmetric Capacities : Posted Price Mechanisms

New ecommerce model called online to offline (O2O) e-commerce has gotten significant managerial and academic attention these years. One of its latest developments in travel industry is opaque selling, which facilitates service providers to provide a new channel to customers. This study uses game models to analyze whether service providers with asymmetric capacities should develop contract with an intermediary in the opaque distribution channel, where the Posted Price mechanism is used to sell opaque services. We build model frameworks for traditional and opaque selling cases, and characterize various optimal pricing strategies. A revenue sharing contract is designed between service providers and an intermediary operating opaque distribution channel. We then compare the profits in the two cases and find some interesting results driven by asymmetric capacities as well as other related factors. Firstly, the level of capacity asymmetry of collaborative service providers has an important effect on their contract decision with the intermediary. Specifically, they may not sign contract with the intermediary when service providers' capacities are highly asymmetric. Secondly, the collaborative service providers' capacities have a great impact on their optimal profits and pricing strategies. Lastly, the relative patience of collaborative service providers is also an important factor that affects their strategic choice