A game theory analysis of pricing strategies in China´s economy hotel industry

Economy hotel is a relatively new concept, and first appeared in China in the late 1990´s. After a rapid growth in the 2000´s, the industry has become highly competitive and pricing strategy has become crucial for a company to succeed in such an industry. In this paper, we apply the game theory to quantitatively analyze the competitive pricing strategies. Nash equilibrium is characterized and other pricing issues such as price discrimination are also discussed based on a leading economy hotel chain in China.