Designing online selling mechanisms: Transparency levels and prices

Nelson Granados, Alok Gupta, Robert J. Kauffman

Research output: Contribution to journalArticlepeer-review

42 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)729-745
Number of pages17
JournalDecision Support Systems
Volume45
Issue number4
DOIs
StatePublished - Nov 2008

Bibliographical note

Funding Information:
The authors wish to thank Mark Bergen, Sal March, Gerard McCollough, Jay Coggins, Sourav Ray, and Paul Messinger for their helpful comments on this research. We also benefited from the input provided by participants at the 2005 Alberta-McMaster eRetailing Symposium, reviewers and participants of the 2003 Conference on IS and Technology (CIST), reviewers and participants of the 2005 Workshop on IS and Technology (WITS), workshop participants at the Michigan State University and staff members from an anonymous sponsor, which provided the data for the present research. We also acknowledge the Decision Support Systems special issue editors, Taedong Han, Carson Woo and Leon Zhao, as well as three anonymous reviewers. Nelson Granados thanks Pepperdine University for its support through the Julian Virtue Professorship. Alok Gupta's research is supported by NSF Grant #IIS-0301239 but does not necessarily reflect the views of the National Science Foundation. Rob Kauffman thanks the MIS Research Center of the University of Minnesota, the Center for Advanced Business through Information Technology of Arizona State University, and the W. P. Carey Chair in Information Systems for partial support. All errors of fact, opinion and findings are the sole responsibility of the authors.

Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.

Keywords

  • Airline industry
  • Analytical model
  • Decision support
  • Demand
  • Economics of information systems
  • Electronic commerce
  • Market transparency
  • Online travel agencies
  • Pricing

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