ABSTRACT
This chapter describes the advantages of hotel chains that made the chain form of organization appealing to entrepreneurs, and prompted them to attempt to change institutional and technical environments to facilitate the operation of hotel chains. Economies of scale will be greater for chains that are geographically concentrated. Mass purchasing and advertising is easier when the units of an organization are close to each other. For example, if a chain makes mass purchases of meat from a single wholesaler, it must then deliver the meat to its hotels. The advent of the automobile meant important changes in the travel patterns of Americans which meant changes for American hotels. Leisure travel was revolutionized. Game theory is a field of mathematics that is commonly applied to analyze economic interactions. The game theoretic approach is to formally analyze the interactions between actors. The benefit of the approach is that it illuminates the complexities of strategic behavior.
