Add-on Policies Under Vertical Differentiation: Why Do Luxury Hotels Charge for Internet While Economy Hotels Do Not?

Song Lin
Corresponding Author
Song Lin
[email protected]
Department of Marketing, Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong
Search for more papers by this author

Song Lin

Corresponding Author

Song Lin

[email protected]

Department of Marketing, Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong

Search for more papers by this author

Published Online:31 Mar 2017https://doi.org/10.1287/mksc.2017.1028

Supplemental Material

mksc.2017.1028-sm.pdf (296 KB)

Cited by
- Selling Professional Products with Consumer Uncertainty in Expertise Advancement
  Zheyin (Jane) Gu,
  Pingfan Wang,
  Rachel R. Chen
  20 April 2026 | Manufacturing & Service Operations Management, Vol. 0, No. 0
- Strategic bundling of information products: Managing consumer group tastes and product versions
  Transportation Research Part E: Logistics and Transportation Review, Vol. 208
- To pre-embed or not? Product design and add-on pricing in the presence of consumer valuation uncertainty
  14 April 2025 | Journal of the Operational Research Society, Vol. 77, No. 2
- Membership Bundling in Platform Competition: To Bundle Add-Ons Together or Separately?
  3 February 2026 | Journal of Theoretical and Applied Electronic Commerce Research, Vol. 21, No. 2
- Vertical Competition on a Common Platform
  Xiaojuan Puyang,
  Zheyin (Jane) Gu,
  Rachel R. Chen,
  Juan Li
  27 May 2025 | Marketing Science, Vol. 45, No. 1
- Research on supply chain cooperation considering manufacturer’s self-operated platform ecosystems
  23 June 2025 | International Journal of Systems Science: Operations & Logistics, Vol. 12, No. 1
- Explaining hotel breakfast pricing under spatial heterogeneity and competitive environments
  26 February 2025 | Review of Managerial Science, Vol. 19, No. 12
- Competitive Manufacturers Product-Sharing Strategies: P2P Sharing or B2C Sharing?
  18 April 2025 | Production and Operations Management, Vol. 34, No. 12
- How market structure and market power shape hotel price discrimination – Evidence from big data
  6 September 2024 | Tourism Economics, Vol. 31, No. 7
- Pricing Durable Add-Ons: Selling vs. Leasing
  Peiwen Yu,
  Haiyang He,
  Lei Lei
  28 January 2025 | Management Science, Vol. 71, No. 10
- The emotional consumer: Sustainable luxury choices amid climate change
  International Journal of Hospitality Management, Vol. 131
- Freemium vs. Deterrence: Optimizing revenue in the face of piracy competition
  Journal of Business Research, Vol. 194
- Brand love and customer brand engagement for masstige: a cross-cultural perspective
  13 February 2025 | Journal of Product & Brand Management, Vol. 34, No. 4
- Insurance policy and pricing decisions in online food delivery market with consumer ratings
  Electronic Commerce Research and Applications, Vol. 70
- Promoting the adoption of electric vehicles through private charging infrastructure: Should subsidies be for the builder or non-builder?
  Transportation Research Part A: Policy and Practice, Vol. 192
- Charging during the stay: the effects of EV chargers’ availability and pricing on consumer perceived utilitarian value and behavioral intentions
  29 November 2024 | Journal of Travel & Tourism Marketing, Vol. 42, No. 1
- Transmedia Storytelling in Tourism Communication: A Multidimensional Analysis of Consumer Heterogeneity
  30 October 2025
- Strategic interactions between manufacturer channel choice and platform entry in a dual-market system
  International Journal of Production Economics, Vol. 279
- Understanding after-market service channel selection for complex product-services supply chains: A game-theoretical approach
  Computers & Industrial Engineering, Vol. 197
- Advance selling policies with stochastic consumer valuations and advertising effects: dynamic pricing and inventory decisions
  International Journal of Production Economics, Vol. 277
- How do wineries price their wine experiences?
  19 April 2024 | International Journal of Contemporary Hospitality Management, Vol. 36, No. 8
- Guest editorial: Wine and hospitality research: opportunities and challenges
  5 August 2024 | International Journal of Contemporary Hospitality Management, Vol. 36, No. 8
- Coordination of complementary tourism supply through a destination card: The pursuit of profitability in the presence of a foreign tour operator
  7 August 2023 | Tourism Economics, Vol. 30, No. 5
- Sales pricing models based on returns: Bundling vs. add-on
  Omega, Vol. 125
- Manufacturer’s optimal distribution strategy in the platform supply chain: Bundling or add-on?
  6 March 2024 | Annals of Operations Research, Vol. 56
- Regulating Platform Self-Preferencing in Add-on Markets
  1 January 2024 | SSRN Electronic Journal, Vol. 30
- Quality effort strategies of video service supply chain considering fans preference and data-driven marketing under derived demand
  Electronic Commerce Research and Applications, Vol. 62
- Optimal return shipping insurance policy with consumers' anticipated regret
  1 October 2023 | Production and Operations Management, Vol. 32, No. 10
- Manufacturer’s product line selling strategy and add-on policy in product sharing
  European Journal of Operational Research, Vol. 308, No. 3
- When Do Firms Offer Higher Product Quality? Evidence from the Allocation of Inflight Amenities
  15 December 2022 | Review of Industrial Organization, Vol. 62, No. 2
- Look before you leap: Comparison and profiles of hotel price determinants in four European markets
  International Journal of Hospitality Management, Vol. 109
- Free Add-Ons in Services
  Pin Gao,
  Xingyu Fu,
  Haoyu Liu,
  Ying-Ju Chen
  31 August 2022 | Service Science, Vol. 14, No. 4
- Product Line Expansion for Quality Differentiated Manufacturers considering Product Sharing
- Offline supplementary service strategies for the online marketplace: Third-party service or marketplace service?
  Transportation Research Part E: Logistics and Transportation Review, Vol. 164
- Existence and uniqueness of price equilibria in location-based models of differentiation with full coverage
  14 January 2022 | Journal of Economics, Vol. 136, No. 2
- The pricing of ancillary goods when selling on a platform
  International Journal of Industrial Organization, Vol. 83
- Pricing strategies for bundled products considering consumers’ green preference
  Journal of Cleaner Production, Vol. 344
- Online information privacy and price: A theoretical model and empirical tests
  Information & Management, Vol. 59, No. 2
- A growing or depreciating love? Linking time with customer satisfaction through online reviews
  Information & Management, Vol. 59, No. 2
- Effects of On‐Demand Product Adjustments on Firm's Pricing and Product Strategies
  1 March 2022 | Production and Operations Management, Vol. 31, No. 3
- Competitive response to unbundled services: An empirical look at Spirit Airlines
  26 August 2021 | Journal of Economics & Management Strategy, Vol. 31, No. 1
- Identifying airline price discrimination and the effect of competition
  International Journal of Industrial Organization, Vol. 78
- Raising Rivals Costs by Customer Diversion: Evidence from Airline Baggage Fees
  17 August 2020 | International Journal of the Economics of Business, Vol. 28, No. 1
- After the Revolution – New Opportunities for Service Research in a Digital World
  SSRN Electronic Journal, Vol. 29
- Asymmetric price responses to hotel competition caused by heterogeneous customers’ willingness to pay
  International Journal of Hospitality Management, Vol. 90
- Free add-on services and perceived value in competitive environments: Evidence from online hotel reviews
  International Journal of Hospitality Management, Vol. 90
- After the revolution – new chances for service research in a digital world
  Journal of Service Management, Vol. 31, No. 3
- Does add-on presence always lead to lower baseline prices? Theory and evidence
  5 September 2019 | Journal of Economics, Vol. 129, No. 2
- Competition in multichannel expert services in duopoly
  Journal of Modelling in Management, Vol. 14, No. 4
- Predictive and Prescriptive Analytics for Location Selection of Add‐on Retail Products
  1 July 2019 | Production and Operations Management, Vol. 28, No. 7
- Leader-follower game in the airlines when the add-on is unbundled from the flight ticket
- O2O results in traffic congestion reduction and sustainability improvement: Analysis of “Online-to-Store” channel and uniform pricing strategy
  Transportation Research Part E: Logistics and Transportation Review, Vol. 122
- Effects of Micro-Transactions on Firm's Pricing and Product Strategies
  SSRN Electronic Journal, Vol. 18
- Explaining Bundle-Framing Effects with Signaling Theory
  Jihwan Moon,
  Steven M. Shugan
  18 July 2018 | Marketing Science, Vol. 37, No. 4
- Unbundling of Ancillary Service: How Does Price Discrimination of Main Service Matter?
  Yao Cui,
  Izak Duenyas,
  Ozge Sahin
  18 April 2018 | Manufacturing & Service Operations Management, Vol. 20, No. 3
- Sequential introduction of quality-differentiated add-ons in advance bundling
- How Add‐on Pricing Interacts with Distribution Contracts
  1 April 2018 | Production and Operations Management, Vol. 27, No. 4
- Impacts of service uncertainty in bundling strategies on heterogeneous consumers
  Electronic Commerce Research and Applications, Vol. 28
- The Impact of Carry-On Baggage Fee and the Differential Burden on Regional Airlines
  SSRN Electronic Journal, Vol. 102
- When Do Firms Offer Higher Product Quality? Evidence from the Allocation of Inflight Amenities
  SSRN Electronic Journal, Vol. 97

Volume 36, Issue 4

July-August 2017

Pages 471-643

Article Information

Supplemental Material

Metrics

Information

Received:June 03, 2015
Accepted:September 15, 2016
Published Online:March 31, 2017

Cite as

Song Lin (2017) Add-on Policies Under Vertical Differentiation: Why Do Luxury Hotels Charge for Internet While Economy Hotels Do Not?. Marketing Science 36(4):610-625.

https://doi.org/10.1287/mksc.2017.1028

Keywords

PDF download

Available Issues

Available Issues

Available Issues

Available Issues

Available Issues

Available Issues

Add-on Policies Under Vertical Differentiation: Why Do Luxury Hotels Charge for Internet While Economy Hotels Do Not?

Supplemental Material

Volume 36, Issue 4

Article Information

Supplemental Material

Metrics

Information

Cite as

Keywords

Sign Up for INFORMS Publications Updates and News