Economic Nature of Tourism Industry Chain and its Market Inefficiency

The consumers of package tour are delighted in the low price of the tour product, but meanwhile they are annoyed by the inferior tour experience of compelled consumption and lowered reception standard. The providers of the package tourism product are the different enterprises on the tourism industry chain. They conduct the exchange of the product and service with the consumers through the connection of the travel agencies. What on earth leads to the travel agency being trapped in the low price competition? Whether should the package tour yield to self-driving traveling and DIY tour? What's the matter with the tourism industry chain? What kind of regulation designing should be made to restrict the reasonable competition among the tourism enterprises and to enhance the consumers' satisfaction? The writer of this essay recollects the recent research on tourism industry chain, analyzes its vertical relationship and economic characteristics, and illustrates Double Marginalization is the essential cause of the tourism chain's inefficiency and social welfare loss. In addition, the author puts forward some solution to eliminating double price markup so as to balance the market. The paper also provides conceptual basis for the market competition strategy based on tourism chain and corresponding regulation design.