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Spatial price competition in the Manhattan hotel market: The role of location, quality, and online reputation
Author(s) -
Rezvani Erfan,
Rojas Christian
Publication year - 2020
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3092
Subject(s) - reputation , competition (biology) , quality (philosophy) , business , product (mathematics) , product differentiation , location theory , industrial organization , marketing , microeconomics , economics , economic geography , cournot competition , ecology , social science , philosophy , geometry , mathematics , epistemology , sociology , biology
We investigate whether and to what extent price competition among hotels in Manhattan is driven by geographic location, quality, and online reputation. We investigate (a) which of the three product differentiation dimensions matters most for hotels' pricing decisions and (b) whether and to what extent competition is localized. Results show that hotel quality and geographic location matter the most for price competition. Whereas hotels of similar reputation also react to each other's prices, the effect is less important. Also, results indicate that hotels' prices react most aggressively to prices set by the four nearest hotels in the area.