The Study About Vertical Trade Relationship Of Online Travel Industry

In the 21 st century, traditional industries, such as medical care, education, finance are combined bythe Internet with its open and innovative features. Based on the combination of the Internet and the travel industry, the online travel generated. In the domestic, diversified and differentiated business model has become the development strategy of online travel industry.A complete industrial structure has begun to merge, and online travel companies pursue innovation. Integration and competition has become the tendency. With the growing online travel market share, big Internet companies also start to enter the market, causing the degree of competition being fierce. At the same time, industry subdivision and the popularity of mobile Internet givethe online travel market adding a new element. The industry enterprises adopt contracts and alliances in order to enhance market power and improve business performance. The transactions bring the industry with much influence. Thus, it is important for us to long study of the vertical trade relationship of the online travel industry andPut forward the guiding opinions on the development of the industry.Based on previous studies, firstly, this paper define the relationship vertical trade relationship of the online travel industry. The relationship vertical trade relationship of the online travel industry is divided into two modes: Contract transactions and vertical integration. Based on the description of the online travel industry chain,we analyze the welfare effects of the different modes of longitudinal transactions. In order to explain the basis for longitudinal mode, we establish a trading relationship model longitudinal mode selection with the organization costs and transaction costs. Next, this paper analyzes the market performance of online travel with the theoretical framework of SCP.By the results, it shows the existing market structure is good for business model innovation and technological progress. Finally, we put forward policy proposals about online travel industry: strengthening the industrial coordination, increasing investment in technology and human capital, establishing strategic alliances, expanding derivatives business and other measures can promote the healthy and harmonious development of online tourism.