document: Online auctions : dynamic pricing and the lodging industry The traditional channels of distribution for overnight accommodation are rapidly being displaced by Web site scripting , online intermediaries , and specialty brokers . Businesses that pioneered Internet usage relied on it as a sales and marketing alternative to predecessor product distribution channels . As such , Web sites replace the traditional trading model to the Internet . Web-enabled companies are popular because the medium renders the process faster , less costly , highly reliable , and secure . Auction-based models impact business models by converting the price setting mechanism from supplier-centric to market-centric and transforming the trading model from `` one to many '' to `` many to many . '' Historically , pricing was based on the cost of production plus a margin of profit . Traditionally , as products and services move through the supply chain , from the producer to the consumer , various intermediaries added their share of profit to the price . As Internet based mediums of distribution become more prevalent , traditional pricing models are being supplanted with dynamic pricing . A dynamic pricing model represents a flexible system that changes prices not only from product to product , but also from customer to customer and transaction to transaction . Many industry leaders are skeptical of the long run impact of online auctions on lodging industry profit margins , despite the fact pricing theory suggests that an increase in the flow of information results in efficient market pricing . The future of such endeavors remains promising , but controversial
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