Supply chain finance risk management: Payment default in tourism channels

Yenming J. Chen, Henry Tsai, Yi Fen Liu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

5 Citations (Scopus)

Abstract

Based on mechanism design theory on asymmetric information, this study devises a selectable menu of contracts with price discounts and trade credit rates and proposes strategies for mitigating the risk of payment default when a tourism service provider trades with unfamiliar tour operators. Tourism service providers are suggested to remain conservative under a positive economic condition and progressive under a moderate economic condition when engaging in a new business opportunity. However, a fringe level of progressivism may be maintained under a moderate economy and a low-risk environment. The net benefit of tourism service providers increases when the bank rate is high, and the profit of the entire tourism channel increases when the percentage or ability to pay reliable agents is high.

Original languageEnglish
Pages (from-to)593-614
Number of pages22
JournalTourism Economics
Volume24
Issue number5
DOIs
Publication statusPublished - 1 Aug 2018

Keywords

  • contract design
  • default risk
  • information asymmetry
  • tourism distribution channel
  • tourism service provider
  • trade credit

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Tourism, Leisure and Hospitality Management

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